7 Ways to Better Manage Your Cash Flow when Selling to Larger Customers….

There are many ways to improve your cash flow,

but how and who you sell may be the most

important way you can control your cash flow.

We all know and love those clients that pay

COD, but they are far and few between. The

reality is that larger customers in the US almost

always take commercial terms (i.e. 30 to 90

payment terms). When selling to larger

customers, many feel they are forced to take

anything they are offered, but there are ways to

get paid faster and better control your cash

flow….

1. Negotiate Vendor Agreement(s) - Even if your large customer says their terms are 60

days without exception, there still can be items that they can do to assist your company

with its cash flow. They can often add a clause for early payments such as a 2% discount

for a payment within a 10 day term…however, bringing your own independent financing

through a company can often save you a lot of money and provide more flexibility.

2. Negotiate Terms of Delivery with Larger Customers - Better logistics equal better

cash flow. For example, if you can have the larger customer pickup FOB China, then

your billing can start sooner and a 60 day term can feel more like 30 days because you

are not carrying the product as inventory. Often, using larger customers’ logistics can

also save you money and time.

3. Better Logistics Equates to Better Financing - When a business has better financing, it

has better cash flow by default (in most cases). Logistics that is fast and without long

holding periods for inventory is easier to finance. If you think of your inventory as a “Hot

Potato” and hold it as little as possible, you will find better financing, profitability, and

cash flow.

4. Make Deals with Suppliers - Chinese Suppliers are tough, but if you take the time to

visit and build a relationship with your factory, they will most likely support your

company with some terms after the first year if your business has been smooth. Suppliers

can be a great source of extra credit and relive strains on your cash flow, especially when

selling to larger customers.

5. Selling Smart - When selling to a large customer, we all dream of the big orders. These

orders can just as easily become a dream as a nightmare. Start by selling small amounts

by selling regions of retailers or via their online presence before rolling your product to

all their stores. Even though buyers are looking for margin and product wins…you need

to be able to win too. Sell smart.

6. Visit Your Buyers - Good communications with you buyer(s) is essential and meeting

up with your buyers for face to face meetings at least twice a year is even more

important. This way you can establish a real connection and credibility that you are really

working with them as a partner. They will, at least, feel motivated to give you a chance to

compete if they are thinking of going with another vendor. Remember, without a real

relationship, you are like the morning trash…ready to be taken out at any time.

7. Get the Right Financing - Yes, we all think we should have a big credit line with the

major bank across the street for at a half point over prime. Again, the faster you realize

what financing is meant for your company, then the faster you can move on to selling and

growing sales. Many small to medium size businesses need working capital to buy more

products and to hire for staff…one does not need to beg a bank for a line to grow.

Commercial lending banks that specialize in lending to businesses like PMF Bancorp can

setup lines of credit, AR financing, trade financing and many other types of financing

without the brain damage that the major banks cause. How? By looking at your good

customer base and basing the line on the future sales growth and product, not past profits

and tax returns which give little indication of future performance in many cases.