Business Strategy: 15 Ways to Speed Up Cash Flow in Troubled Times
It’s a meltdown out there. Financial institutions are crumbling, the government is stumbling and your customers are about as bearish as a grizzly the day before it hibernates. When your retail customers’ sales are down, it means yours will be too—along with higher returns and slower payments.
So how can you protect yourself? How can you hedge (do we dare use that term anymore?) your cash position and get payments more quickly? Here are 15 tips you can implement tomorrow to help you through this slough of despond.
1. Remember, above all, that your company is not a bank (and, today, that’s a good thing). You can’t afford to be a bank, you’re not set up to be a bank, you don’t want to be a bank—so don’t let your customers treat you like a bank. Your responsibility is to collect your money as fast as possible.
2. Budget more realistically. Cut your sales projections by 15 percent and print shorter runs. You’ll maintain less inventory and tie up less cash in the first place.
3. Use print-on-demand (POD) where possible. Save cash by printing only what you need.
4. For books where POD doesn’t make sense, don’t reprint too quickly. For most books, a short out-of-stock condition won’t be overly detrimental. Better to accumulate back orders for a bit than to print too many. The most expensive printing is the last printing.
5. Be doubly stringent on your credit limits. Who would have thought AIG would go under? Merrill Lynch? Not many. Well, the same can happen to distributors, bookstores and large wholesalers. Don’t be intimidated by the big guys. Set limits for them as well and adhere to those limits. Put any account over 120 days on a firm hold until they pay. Don’t assume stability; plan for instability.