5 ways your business can find cash

Also, even loans backed by assets can be difficult to get for companies with less-than-stellar credit ratings. Mark Sunshine, the president of First Capital, a West Palm Beach, Fla., finance company, says he's seeing more demand for loans based on accounts receivable or assets but isn't necessarily doing much more business.

"There's a reason local banks won't lend them money," he says of riskier small companies. He says he's sticking to companies with lots of assets to use as collateral.

Negotiating with customers or suppliers

Another smart strategy for helping cash flow -- perhaps even if you do have access to loans -- is striking better payment terms with customers and suppliers, Amit says. Especially when business relationships are strong and long-lasting, many companies are willing to help each other out in tough economies.

A business that usually gives customers 30 to 60 days to pay the bills, for instance, might require customers to pay upon receipt of goods. A supplier, on the other hand, might be willing to extend lengthier payment terms to a business customer if it feels the customer is trustworthy and vital to its own business. Some suppliers also will lend money to their long-standing, most valued customers.

Changing behaviors

Hard times call for small businesses to be nimble and entrepreneurial. Many businesses are using the tough economy to scrutinize their business practices and find creative ways to create better cash flow.

Some turn to leasing instead of buying equipment they need. Others are identifying areas of the business that will tend to be more lucrative in today's economy and shifting their resources in those directions.

This article was reported and written by Kelly K. Spors for The Wall Street Journal, with contributions from Simona Covel.

Published Oct. 16, 2008

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