Look for cash internally while getting better bottom line results.

Every business person knows money is tight, and the credit markets show little signs of helping anytime soon. Since businesses don’t have the luxury of the government to simply print money when they need it, they have to look for more practical sources.

One of the least expensive places to find of cash is internal. Make sure you have tightened up internal processes and exhausted all internal potential. This source of cash is the least expensive, the fastest, and it can give you better bottom line results.

Where are internal sources of cash? Some are obvious and some are tougher to spot. Here are a few examples:

Inventory – is cash sitting on your floor.  If it isn’t moving find a buyer for it even at a discount. Utilize just in time purchases to minimize cash tied up in inventory.

Accounts Receivable – money is tight for everyone, allowing your customers to stretch you out makes their problem your problem. One thing I found that works well is a small prompt payment discount. Especially larger companies are open to shorter terms such as 10 days for a 2% discount. The discount is cheaper than borrowing money.

Quality and rework- this is a huge cash burner. Scrap must be measured and controlled. If you are buying raw materials and aren’t using them to generate sales that’s waste. You’re spending cash and not recovering any.The same is true of poor quality. If you ship and bill something and have to accept a return and reship, it’s incurring costs without increasing sales.

Poor performing employees – they cost the same as top performers, but don’t produce as much. Demand a return on all of your investments including your investment in people.

All of this is made easier by having clear and timely data to support your decisions.