When you’re facing cash-flow challenges (and you will at some point!), you need more money and fewer expenses, but there’s something you need just as badly: time.
The good news is you can gain time by asking your creditors to give you some space. Here are three options Denise O’Berry suggests in her excellent book Small Business Cash Flow:
1. Stretch out your payment terms. Ask to switch from a 45-day window to 60 days. If you’re at 90 days, then ask for 120-day terms.
2. Set up quarterly payments. Rather than paying your bill monthly, ask creditors if they will accept quarterly payment.
3. Ask for a discount. If you’re able to pay your bill before it’s due, then ask for a discount; start by asking for 10 percent. Nearly every company I’ve ever known (including mine) will be very willing to work with you on payment terms. They want to get paid, and they also want you to stay in business! If they know that the easing of terms will help, they will work with you. And they’ll be impressed that you’re confronting your cash-flow challenges.
The Next Step
Make a list of the creditors you will approach and then do it.