financing

Though we are now nearly four years past the official end of the Great Recession, obtaining credit remains challenging for many small and mid-sized businesses. This is especially true for businesses that have experienced difficulties such as a drop in revenue, or those with inadequate capital structure to support their cash flow.

Hopefully, your dollar store will receive plenty of extra traffic during the major holidays. You will likely be focused on getting rid of all the holiday merchandise you have for sale. However, do not forget that people will still be buying general dollar merchandise during the holidays too. While your customers are doing their holiday shopping try to maximize sales of general merchandise.

In many industries, an important cash flow strategy is to take advantage of what are often referred to as early pay discounts, or “2/10, net-30 discounts.” Such discounts allow companies to subtract 2 percent (and sometimes more) from the invoice amount if it is paid within 10 days instead of the normal 30.

These discounts can really add up, especially for companies with thin profit margins. The challenge for many companies, however, is managing their cash flow system in a way that enables them to take advantage of these discounts on a regular basis.

With the credit crunch in full force, many small businesses are finding it harder and harder to land traditional bank loans. Even business lines of credit are being squeezed tighter—often yanked right out from under companies that have long established histories with financial institutions.

Fast-growth companies are especially vulnerable in the current credit environment. Those with 20 percent or higher annual growth rates can make banks nervous even during the best of times, since fast growth can knock their ratios out of whack and result in temporary periods of unprofitability.