How To Access Cash Tied Up In Your Business

There is a reason why cash flow is known as the lifeblood of every business enterprise. Cash flow is what keeps a business going, and enables the owner to deal with day to day activities. Without cash flow, your business will come to a grinding halt.

Cash flow is essential to be able to pay your employees, buy stock and materials, settle outstanding bills, and keep your business running smoothly, without interruption. When the cash flow dries up altogether, your business dies.

So, what do you do when all of your cash flow is tied up in your business? You need to find a way of getting to it, and sometimes, fast. It is a common problem, but thankfully there are a couple of easy-to-implement options that all business owners can look into when you need money to be released from your business.

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Liquidate Your Excess Inventory

If you are having problems with cash flow, there is a good chance that too much of your capital is tied up in your inventory. Therefore, the first thing you need to do is liquidate what you have in stock in order to free up the money you need. According to financial experts, excess inventory is what ties up most companies’ money.

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It may be time to go through your stock to find out what has been sitting there for too long. If you do find that you have excess inventory, here are some things you can do to earn money from it.

Put The Inventory On Sale

This is the simplest way to get rid of excess stock and raising some quick cash flow. You could have a warehouse sale or even sell excess inventory to other retailers. If you want to move it fast though, you need to have a plan. If you are really in a pinch, you could significantly discount these items so they will move faster.

Bundle It With Other Products

If you have some slow-moving products that can easily be complemented by other inventory, why not bundle everything up together and see if it will make it easier to sell?

You could also try selling them as impulse purchases – this will work well if you have small handy items that you can try to sell as impulse buys. You can display them on counters near the exit of your store to entice your customers to purchase them.

Sell It To A Liquidation Company

There are plenty of liquidation companies that are more than willing to take your surplus stock off your hands. This is a great way to make money quickly, but you are likely to get fewer profits as they tend to purchase at a rate that is lower than market value. However, if you need money urgently, this can be a great option. This idea is great for those who do not want to shout about their cash flow difficulties and don’t want their competitors getting the impression that things are not going well right now.

Use Online Marketplaces To Sell

You can look for alternative sales channels such as an online marketplace that may help you dispose of your extra inventory quicker than if you had to sell it off in-house. There are many companies and consumers with an online presence that may be interested in taking your inventory off your hands.

Offer Free To Gifts To Your Customers

This gives you a great opportunity to conduct a promotion for your business by offering your clients some freebies whenever they purchase other products in your store. We all love free things! People flock to an offer for a free gift and it can be a great enticement to get customers into your business. This is why this strategy is a win-win!

It could be a promotion that you run in your organization that tells your clients if they spend a specific amount of money, they will receive something as a bonus. Or it could be that if they buy a specific product, they will receive another item as a free gift. There are lots of ways of using excess inventory to leverage more business.

Use Accounts Receivables

If you don’t have any excess inventory, this is another option to get cash out of your business. This refers to invoices that haven’t been paid yet. Have you supplied some goods to your clients and they promised to pay you on a specific date, but the payment hasn’t materialized yet? If you have the invoice to prove this, you can use the pending payment as a way to generate the cash you urgently need to keep your business operations ticking over.

As much as we all wish customers would just pay on time, believe it or not, unpaid invoices can be considered an asset to your organization. Overdue payments are money that you should have, but you do not have yet. Hence, you can use them as a way of securing the financing that will help you get through a sticky period.

The beauty of this type of financing is that it tends to have a low-interest rate. In addition, the bank or lender may be able to give you up to 100% of all your accounts receivables. You can take the invoices worth up to $100,000 to the bank, and depending on the credit rating of the company whose payment is owing, the lender may be able to advance you the full amount.

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Image source: en.wikipedia.org

Conclusion

Keeping a handle on your cash flow is critical for a functioning business. If you can see that you are going to run into difficulties in the near future it is important to act fast and think of strategies that can help. Don’t delay action hoping the problem will sort itself out. There are plenty of ways you can free up some of that all-important cash and allow your business to keep on growing.

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