Has your small business ever experienced a cash pinch? You’re not alone. A survey of 515 small business owners revealed that 37% have experienced cash shortfalls from time to time and 75% have experienced cash fluctuations that affected their suppliers and vendors.1
Most owners cover those shortfalls with personal cash infusions. But there may be a better way. Here are three strategies to maximize your business cash.
1. Pay attention to payables terms and pricing.
Review the standard payment terms of your suppliers and vendors. You may find opportunities to hold onto your cash longer. Extending payments essentially provides you with a short-term, interest-free loan.
Other payables-stretching methods—like implementing a delivery acceptance period on all purchases—can extend cash by delaying vendor invoicing.
2. Remit payments electronically.
Paying electronically gives you control over how and when to pay vendors and suppliers. And it allows your company to retain more cash. You’ll also increase the visibility of your payments data, improve your reporting, and reduce your processing costs.
Using a credit card Go to Truist Small Business Credit Cards can extend your days of payables outstanding—the average time from invoice receipt to payment—from a current average of 27 days to as long as 30 to 45 days. That means you’ll keep your cash longer.
3. Lean on partner relationships.
Like most small businesses, you’ve probably developed strong relationships with your suppliers and partners. Use that relationship capital to get some breathing room with payments. Talk to them. Explain the nature of your shortfall and ask if you can make partial but stretched payments. Offer to pay a bonus for a payment extension. It might just be enough to get you around a temporary challenge—like a customer loss, an unexpected expense or a slow time of year.