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What to Do When Money Is Tight
 Through your cash flow projections, you can see it coming. But despite your best efforts, there’s not enough cash to pay all your bills.
What do you do now?
Addressing a cash shortfall should be done early — and honestly.
Almost all businesses experience a cash crisis. How you manage the crisis is the key.
The steps you take — or don’t take — will affect your reputation and that of your business. They will affect your relationships with your employees, vendors and bankers.
Ultimately, your decisions will determine if your business will survive.
All this may sound dire, but it becomes so only if you ignore the situation.
The following are several steps you can take to improve your cash situation quickly:
- Become a Spending Disciplinarian
Cut out all unnecessary expenses. From now on, before making every business expenditure, ask yourself, “Will this get me another customer?”
Do you really need $40-a-pound coffee in the office? Do you need a new piece of equipment, or can you buy it used? Do you use all six phone lines or can you cut it down to four? Do you need a new truck just because the lease is up on your old one?
- Be rabid about collecting your cash
Try to get your customers to pay on time or even early. If you have not received a payment from a customer on the day it is due, call him and ask when you can expect payment — get a specific date. Continue calling until your bill is paid.
Remember the expression, “the squeaky wheel gets the grease.” Offer discounts to your customers who pay early.
- Send Invoices More Frequently
Instead of sending customers an invoice once a month, consider billing them weekly. It might be a bit more work, but will get you cash in your checkbook sooner.
- Turn Unused Items Into Cash
Sell items that you are not using. Get rid of excess inventory and unused tools on E-bay, craigslist or other online classified services, or in your local paper.
- Lease Back Your Big-Ticket Equipment
If you have big-ticket items like vehicles, backhoes and even phone systems that you have already paid for, you may be able to contact a leasing company to buy those items and then lease them back from the company.
While this solution should generate some up-front cash, you will have to make regular lease payments and can risk losing those assets if you miss your payments.
- Make Deposits Daily
Don’t wait until the end of the week to make a bank deposit. Make a deposit every day that you receive money.
- Develop a Plan
If your cash crunch looks to be more than temporary, create a plan to address the issue.
Don’t just pay some vendors — like the ones who call you often or the ones with small balances. Work on a plan to pay something to everyone. You might want to get some advice and assistance from your accountant or lawyer.
- Talk to Your Bankers
It is usually too late to borrow money when you really need it, but it is worth asking. Meet with your banker to see if you can get a line of credit.
Or, see if you can adjust the terms of existing loans. Your bankers won’t be happy about adjusting the terms, but it’s a better solution for them than seeing you go bankrupt.
- Talk to Your Creditors
Be upfront with your creditors. Calling them in advance and asking for an extension of the due date is better than having to explain why you haven’t paid your bill.
These are not easy phone calls, but they will maintain your integrity and reputation. Be honest. Suggest a payment schedule, but don’t make promises you can’t keep.
If you don’t know when you can make the next payment, tell your vendor when you’ll be making the next decision and follow-up with them then.
Again, your vendors may not be happy with you, but most will understand as long as you stay in contact with them regularly.
Jennifer Elder is a CPA, certified management accountant (CMA) and the chief financial officer for Tiffany Construction and Development Corp. in Melbourne, Fla. For more information, e-mail Elder, or call her at 321-259-5001 x110.
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 Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
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