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David Brown

6 Solutions to Short-Term Cash Flow Problems

Problems can arise if you aren’t vigilant about how your receipts and payments are tracking.

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MANAGING CASH FLOW can be an urgent issue for any business. Problems can arise if you aren’t vigilant to how your receipts and payments are tracking. Sometimes, you need a solution that can give you quick and easy cash to keep you going. Here are some of the best options you should consider.

1. Get short-term financing. If you feel the situation can’t be resolved without external help, then short-term financing, such as a line of credit, can see you through. It has the added advantage of being able to be repaid when the funds are no longer needed, keeping costs to a minimum.

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2. Long-term financing. This can be a longer process and will generally involve putting up assets as security for a more permanent arrangement. Although this may result in a larger sum of funding, be careful: your assets and debt should match in terms of time frame. Using long-term debt for short-term cash flow needs can be a recipe for disaster (as can short-term debt for long-term asset purchasing). Long-term debt should be used primarily to purchase assets that provide long-term returns to the business, not as a means of “tiding you over” until things get better. You need cash flow every day, but you only have so many assets you can draw against.

3. Speed up recovery of receivables. Although retail is normally a cash business, there may be some areas in which you run an account (e.g., insurance companies) or other parties with whom you have a good relationship. In these circumstances, it’s important to manage the repayment process. A discount can be an effective incentive for this.

4. Get a larger deposit. Your customers are often your best means of short-term funding. Increasing your deposit on custom jobs from 20 percent to 50 percent can add several thousand dollars permanently to your bank float.

5. Manage your repairs. Follow up consistently with repairs that aren’t collected. This is dead money sitting that is easily forgotten about because the items don’t belong to the store. You have an investment in those items you need to recoup.

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6. Sell surplus assets. Inventory is often the first choice for doing this, but is there other equipment or assets you no longer need? If you’ve ever run a garage sale, you’ll know how much cash you can round up from extra stuff you have — the same may be true of business assets such as old desks, tools and display cabinets you no longer use. Don’t assume they are worthless just because you will recoup much less than what you paid for them.

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When the Kids Have Their Own Careers, Wilkerson Can Help You to Retire

Alex and Gladys Rysman are the third generation to run Romm Jewelers in Brockton, Mass. And after many decades of service to the industry and their community, it was time to close the store and take advantage of some downtime. With three grown children who each had their own careers outside of the industry, they decided to call Wilkerson. Then, the Rysmans did what every jeweler should do: They called other retailers and asked about their own Wilkerson experience. “They all told us what a great experience it was and that’s what made us go with Wilkerson.” says Gladys Rysman. The results? Alex Rysman says he was impressed. “We exceeded whatever I expected to do by a large margin.”

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