How to survive cash flow crisis ?

Every business possess some assets which company doesn't require or use very seldom, at the time financial crisis these assets can be disposed off and generate some cash to improve the position of cash flow in the business.

By offering discounts on invoice you can speed up your collections, but make sure that you understand how much it is costing you.

Offer discounts like giving 3% or 5% if payment is done within 10days...But make sure to understand how much it is costing you.

Well this is what so many companies have done in the recent times and you can also do that but don't let them go entirely.

As each employee has his own specialized revenue generating abilities. Instead of letting go entirely, discuss and rehiring them as freelancers, it will reduce costs of health insurance, payroll and stock options for you...and you will retain the skilled employee as well.

Its always good to reduce the expenditure and be more proactive in the cash outflow.Uncalled for expenses and being tightfisted on the avoidable expenses is good at the time of cash flow crisis. Let me know your thoughts guys...

One way to improve cash flow is it to defer unnecessary expenditure for some time so that cash ouflow reduces and strenghten the position of cash flow in the business.

Factoring is a financial tool which helps the companies who are stuck into liquidity crisis and are unable to meet their liquidity needs, here these kind of liquidity products can be used to get out of the cash crisis.

There are 2 types of factoring - recourse and non-recourse. In recourse factoring atleast 85 to 90% of recievables are paid by the factoring agency and a  credit period is also given to the seller. After the credit period gets over the factoring agency collects the due formt he buyer and pays the remaninig balnce after cutting their interest and agency fees.

Where as in non recourse factoring the facility is the same but the factoring agency also takes the credit responsibility of the buyer. So if after the credit period the buyer doesnot pay the seller is not at all liable as he is in recourse factoring. but the agency fees are also higher than the recourse factoring.

A company small or big should have a Cashflow plan for the whole financial year on monthly basis. So the payroll requirement must be either maintained as cash or as accounts payable which need be financed. This is the most ethical process when it comes to managing cash flows. Last minute trying to rais cash devoid of a plan will be risk and create randomness.