Cash Flow Statement Are Not Obligatory For Small Company In 3 Ways To Finance Your Business Without Credit Cards

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3 Ways To Finance Your Business Without Credit Cards

If you’re strapped for cash and need to find some funding for your business, here are three ways you may have overlooked.

1. Supplier financing

Stretching accounts payable from, say, 30 days to 60 days is a fairly common method for companies to improve their cash flow. Typically, sellers aren’t too happy when this happens, and some even express their disapproval in no uncertain terms. Most companies are small businesses, and long-term stretching of liabilities hurts everyone. Think about it: if you depend on one of your customers to pay you within 30 days, and that customer doesn’t pay for 90 days, it can significantly affect your cash flow. If this is one of your larger customers, the impact can be very serious. You don’t have the money to pay your bills, so a ripple effect occurs.

This proposal is different. If you have established a good relationship with your vendors, it is sometimes possible to get them to agree to finance part of your business by extending their terms on a particularly large order for an extended period of time. If you’re a new business with little or no history, you can approach vendors and show them your business plan and documentation of orders you’ve already received. If the seller is confident that your business will be successful and that you will be one of their better customers in the future, they may be willing to give you a break now.

Another option is to promise the seller that they will be your exclusive supplier for an agreed period in exchange for longer credit terms. Alternatively, you can offer to pay slightly more than the market price in exchange for longer credit terms. This method can be dangerous as it favors a higher price. Once longer terms are no longer necessary, it may be a challenge to lower the price you pay the seller.

Occasionally, it is possible to persuade the seller to exchange the trade obligation owed to him for a promissory note instead, or perhaps an ownership position in your company.

2. Customers who pay in advance

If you have successfully demonstrated to your customers that you are delivering your goods on time as ordered, you may be able to convince one or more of them to put down a deposit on their future orders, perhaps as much as 50%. You can add an incentive by lowering the price a bit in exchange for a deposit. Or you can add a bonus: if they ordered 100 products, you give them 10 extra. New customers may also require a deposit, especially if it is a large or custom order.

3. Trade and exchange

Barter is probably one of the oldest forms of trade. It is simply an exchange of goods or services for other goods instead of using cash as a medium. Trade can take place directly between the two parties or through barter.

Barter usually works on a point system, one point for every dollar. The exchange has members who have agreed to exchange their services and products. Let’s say you need a new laptop, but a computer store doesn’t need your product/service. You earn points by haggling with those individuals and businesses who need your product/service. You collect points by trading. When you have enough for a laptop, you ‘buy’ the laptop with the accumulated points. The exchange sometimes takes a small percentage of points as a commission for its services.

Don’t be limited in your thinking about what can be replaced. Approach the exchange as you would any other sale or purchase. Do business with reputable companies. Don’t feel like you have to discount your product. A barter purchase is reflected in your income statement as an expense. Barter sales (what you trade) are reflected as income.

Barter organizations can be found online, just enter the store and the barter organization. Many cities have locally run barter organizations. Contact your local Chamber of Commerce. There are also lists in the yellow pages.

Use these three methods to get money for your business.

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