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Hints and Tips | Five Tips to Ease a Cash Crunch

Home | Hints and Tips | Five Tips to Ease a Cash Crunch

Five Tips to Ease a Cash Crunch
  1. Sell off inventory and assets – Many businesses have inventory that’s just taking up space. Walk through your office or warehouse to see what’s collecting dust and bump it for a one-time cash infusion, even at a loss. A sunk cost is a sunk cost. Hanging on to it compounds the error.

    Generate more immediate cash by selling off unused equipment and machinery. Use Internet selling sites or an equipment auctioneer. This may also create surplus floor space you can rent out.
  2. Work with your suppliers – Be upfront about your situation. Can you get extra time to pay your bills? Could you offer partial "good faith" payments? Most suppliers would rather get paid down the line than not at all if your business fails.
  3. Reduce employee hours – You can temporarily cut employee hours if business slows. It increases your odds of keeping everyone on staff instead of losing valuable personnel.
  4. Renegotiate your lease – Ask your landlord to reduce your rent temporarily and let you make up the difference later on. Here again, many landlords would prefer to keep you as a tenant rather than run the risk of having an empty space.
  5. Factoring – Consider selling your accounts receivable to a factoring firm. Such a firm takes your accounts receivable in exchange for immediate cash. Fees can be high – 18 to 22% annualized – so this shouldn’t be a long-term solution. But the cash might be available right away to cover shortfall.

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