A Source of Funding: Your Suppliers

If your business has a healthy cash flow, you can negotiate with your suppliers to keep the cash in your hands a bit longer. For instance, instead of opting for a net-30 days account, you can negotiate with your suppliers for a net-60, which will allow you to keep your cash for an extra month. Normally, this arrangement is available without interest and this can provide valuable cash flow for your business.

The more cash that you have on hand, the less reliance you will have on credit facilities. This will allow you to avoid expensive interest rates, and will also put you in an overall stronger financial position. When paying your bills, for instance, be sure not to pay too early. This will prevent you from getting into a “crunch” — especially at the end of the month where you will need money to pay most of your bills. Be careful, because this is when you may be tempted to use your credit cards if cash flow is slow.

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