Finding Money Within Your Business

Most small businesses experience cash-flow problems from time to time and urgently need working capital. Many business owners immediately think of bank loans when they’re short of money. But there are other resources you can tap into before you ask for that expensive overdraft or overdraft extension. 

The money you need might already be there—locked up in inventory, assets, or your outstanding customer invoices. 

You can often free up funds from within your business by re-examining your business systems, which might be enough for your immediate cash-flow needs. 

Good management 

Even if the funds you free up from within your business are not sufficient, there is another payoff: The effort you make in searching for them helps to ensure you’re running your business efficiently. 

To free up funds from within your business, look closely at:


Your assets include current assets:

And fixed assets:

  • Buildings
  • Land
  • Fixtures
  • Equipment
  • Vehicles
  • Machinery
  • Furniture

Each is a possible source of funds. 

Accounts Receivable

Are you letting some customers have free use of your money for months? 

This is common in small businesses where the owners are so busy getting products out the door or services completed, they don’t pay enough attention to basic business procedures. Many customers will take advantage of this “free money.” 

But your business shouldn’t serve as a free bank. 

Here’s how you fix the problem:

  • Get invoices out promptly. Whatever else you do, become efficient at getting invoices out early. This is your future cash flow—the lifeblood of your business! 
  • Send the invoice with the goods, or immediately after the service is completed. Date the invoice from no later than the day it is sent, rather than following the standard last-day-of-the-month invoice date. The earlier the invoice date, the better your chances of getting paid earlier.

Depending on your business, you can also often cut out statements simply by printing at the bottom of the invoice, “Please note that no statement will be sent.”

  • Change the terms for some of your customers, or for new customers. For example, can you ask for immediate settlement or set reduced payment terms, such as 7 days or 14 days from the invoice date? 
  • Follow up promptly when invoices aren’t paid by the due date. This is critical. Be polite but firm. If you don’t have time to do this yourself, appoint someone to do it for you.
  • Monitor your accounts receivable report and set an improvement target each quarter. You can start by finding out the benchmark standard for your industry. If the average in your industry is 30 days, but you are taking an average of 45 days to collect outstanding debts, there’s clearly room for improvement. If your customers or clients have been taking advantage of you because of your previous leniency in invoicing, then you may need to re-educate them. Do this politely so you don’t offend customers:

“Have you received our invoice, Diane? I’m just checking that you’re happy with the goods/services we provided?”

“We’ve started a new invoicing system because we’ve been a bit lax in the past. My accountant has set some tough goals for me to meet in reducing our average debt collection cycle, so if you could settle that invoice promptly I’d be grateful.”

  • Consider factoring—selling your outstanding invoices to a finance company. So instead of waiting 30 or more days until an invoice is paid, you receive most of your money upfront from the finance company, who will in turn collect the money from your customer. The finance company will, of course, charge you a commission for this service. 

And make sure the finance company will not antagonise your customers with a heavy-handed approach. Talk to them first about their collection methods.

  • Consider offering a discount for prompt payment. If you’re thinking of paying a fee for factoring, why not try offering a discount to your customers instead? Discounts for prompt payment are not a good option for low-margin businesses, but they can be an option for high-margin operations. You have to work out whether the use of money gained earlier is worth the discount you’re offering. NEVER give the discount if the person has missed the due date for the discount offer. (Yes, some will try.)


Do you have excessive capital tied up in stock? This can happen in two ways: 

  • Carrying large volumes of items you could obtain from suppliers at short notice.
  • Having too many slow-moving items (and too few fast-moving items).
Regularly review your stock levels, your stock turnover rates, and your purchasing policies.

Have a quick sale. Can you free up money by reducing stock? What about moving away from selling slow-moving stock or having a quick sale of dust-collecting stock? It might pay to reduce some items quite heavily to get some money in quickly.

Return extra stock. Can you approach suppliers to take back any excessive stock you’ve ordered? They might help you out of a temporary tight corner as a goodwill gesture if you explain you have a temporary cash-flow crisis, but that you do wish to build a long-term relationship with them.

Reorder strategically. If you need additional funds to purchase more stock, make sure you’re replacing slow-moving stock with the faster selling items. When you reorder, be sure to set up automated reminders so you know when your stock gets down to a critical level to avoid stock outages on important items. Consider also setting up default reorder quantities so you can place the most economic orders.

Prepaid expenses

Prepaid expenses often relate to services. For example, you might pay your insurance bill for the year all at once, or you could arrange to pay small monthly amounts. There might be a small cost for doing the latter, but you must weigh the extra cost against the advantages of 12 small payments that your cash flow can comfortably handle versus one large annual payment. 

Try a similar approach with your accountant: Instead of facing a substantial bill once a year, ask if you can pay a set amount monthly.

Fixed Assets

Most small businesses don’t own buildings or land, but fixtures, equipment, vehicles, machinery, and furniture can still drain significant amounts of cash out of a business. So ask yourself whether you’re really putting all your assets to full use. Depending on your business, you might be able to:

  • sell off little-used assets and rent suitable replacements when you require them. 
  • lease or rent assets and equipment that depreciates rapidly such as computers and or vehicles.


Don’t forget that your customers can be a source of business funds. Apart from debt collection improvements already discussed, try these tactics:

  • Accept credit card payments. If you have customers who buy products or services from you on credit, ask them if they’d be willing to use credit cards for purchases from you instead. This way, they’ll still get more than 30 days to pay their bill, but the credit card company would be waiting for your customer’s payment instead of you. You have to pay the 3–5% credit card processing fee, but otherwise, it’s almost as good as a cash transaction.
  • Establish a cash-only business. If you’re starting a new business, consider asking for payment up front and eliminate accounts receivable altogether. 
  • Ask for progress payments. If you supply goods over a period of time, or if you’re a service business, invoice for progress payments. This is a common method of ensuring you get some cash flow during a project instead of waiting until the end of a project or delivery period to invoice—and then still waiting at least another 30 days for payment. 

There’s another benefit here too, which is especially excellent for tradespeople subcontracting to a developer: You’ll discover early if you have a customer who evades payments, so you can cut your losses before they mount up and drag your business down. 

  • Automate withdrawals. If you provide regularly scheduled services, set up pre-authorized funds transfers from your customers’ bank accounts using software like Telpay or Rotessa


Finally, consider your suppliers as a possible source of funds. Ask for extended payment terms to give you the opportunity to sell the goods first before you have to pay. 

If the supplier won’t budge, try this tactic: Split the order in two and offer to pay normal credit terms (30 days) on one half of the order and 90 days on the other half. Your suppliers will be more likely to agree to this kind of arrangement if you’ve paid them promptly in the past. After all, they have a vested interest in helping you succeed.

Take advantage of discounts. This is an easy one. If any suppliers offer a discount for early payment, then take it (and there is no harm in asking for a discount). 

These are just suggestions, which may not all be suitable for your business. Feel free to contact us about ways to find money in your business, and make sure you find more profit.