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Finding cash for your business

Many businesses encounter cash flow difficulties every year, particularly during growth phases when expenses often rise faster than revenue or due to seasonality. This causes a need for effective cash flow management and possibly even the need to secure additional funding during these challenging times.

The good news is that with planning and the right strategies, you can find the cash you need to maintain operations and keep your business thriving.

Here’s how.

Start with a cash flow forecast

A detailed cash flow forecast can help you pinpoint when you might run out of cash and identify the funding, you’ll need to bridge the gap. Testing different scenarios, such as pricing adjustments or cost reductions, can also help you determine how to extend your cash runway.

Opportunities to free up cash

Before seeking external funding, you may want to explore opportunities to free up cash from within your business.

You can:

• Review your balance sheet for assets you no longer need. This could include surplus inventory, unused machinery, or vehicles. Selling and leasing back essential equipment can also free up cash.
• Offer discounts to customers for early payment or encourage them to pay upfront.
• Hold a sale or return excess inventory to suppliers to raise immediate cash.
• Temporarily cut back on withdrawals from the business until revenue improves.

Looking closely at your business operations and making strategic adjustments may help you find valuable cash reserves without the need for external funding.

Tighten your cash cycle

Improving how quickly cash flows through your business can make a significant difference:

• Ask customers to pay by credit card or set up automatic payments for recurring invoices. You’ll get paid faster, reducing the time it takes for funds to reach your business and helping to prevent overdue invoices. Offering convenient payment methods like credit cards or direct debits can speed up the payment process. 
• Require deposits or progress payments for large projects. For larger contracts or projects, requiring upfront deposits or milestone payments means you’ll have cash on hand to cover initial expenses and reduce the risk of delayed payments.
• Perform credit checks on new customers and set strict payment terms. Protect your business by assessing the creditworthiness of new customers before offering extended payment terms. Implement clear payment terms, such as 30 days, and charge interest on overdue payments to incentivize timely settlement. 
• Add online payment options to your invoices to encourage faster transactions. Platforms like PayPal, Stripe, or bank transfers can make it easier for customers to pay instantly, ensuring quicker cash flow into your business.

Tightening your cash cycle is essential for improving liquidity, reducing payment delays, and making sure your business remains financially healthy and agile. The faster you can turn your sales into cash, the more effectively you can manage operating costs and reinvest in your business.

Secure external funding

If internal measures aren’t enough, consider these external funding options:

• A business term loan, or line of credit, can provide the cash you need to weather tough times.
• Refinancing existing loans can help lower monthly payments by extending terms or consolidating high-interest debt into a longer-term loan. Using business assets as collateral might also unlock additional funds.
• Explore U.S. government grants and programs that provide financial support to small businesses. Many states and cities offer grants or low-interest loans for businesses, and the Small Business Administration (SBA) offers funding programs like the 7(a) Loan Program or microloans for working capital.

For more than 175 years, we’ve been helping businesses find the financing they need to move forward with confidence. Whether you’re looking to manage cash flow, invest in growth or take advantage of a new opportunity, our fully customizable suite of lending products is designed to meet your business where it is today and help you get where you want to go tomorrow. With experience you can trust, and financing solutions tailored to your needs, we’re here to help you find the right cash solution for your business. Speak with one of our local Commercial Relationship Managers today.