7 Ways to Better Manage Your Cash flow when Selling to Large 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 factoring company can often save you a lot of money and provide more flexibility when employing a/r financing.
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 using accounts receivable financing or an accounts receivable loan. 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.

1. 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.
2. 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.
3. 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. An invoice factoring company or a commercial lending bank that specialize in lending to businesses like PMF Bancorp can setup lines of credit, A/R financing, factoring, trade financing and/or PO 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.

In 1985, 1st PMF Bancorp was founded as a family run lender providing factoring, but as our clients’ businesses expanded globally.