Rusty Luhring, who has spent three decades as a consultant and financialsoftware developer, is passionate about aggressive management of cash flow andfreely shares his tips and experiences at http://www.survivalware.com. Hismost timely advice? Telling people to take immediate action-before their cashcrisis escalates. "They need to do some detailed planning to understand themagnitude of the problem, and when their cash needs are greatest," he says."Similarly, they can bolster cash flow by thinking outside the box aboutinvoicing and collections."

Having bootstrapped two start-up companies, starting in the late-70s, hehas a lot in common with those seeking his help. He offers the following 10steps to help business owners and entrepreneurs to start regaining control oftheir cash flow.

1. Triage payments

Make a list of all payments due for the next three months. Give payrollpriority and see what else you can negotiate to pay later. You may be able toslide with utilities; subcontractors can often be persuaded to wait a bit.

2. Accelerate collections

Call customers to check on payments that are overdue, or due soon. If youhave a good relationship, you may be able to ask for early payment as a favor.For older accounts receivable, offer to forgive 15% of their overdue balanceif they pay within the week. This may encourage them to respond and it's lesscostly than hiring a collection agency to go after receivables you may neversee.

3. Invoice early

If you consistently send out invoices a week late, you are delayingreceipts by a week. If you average $7,000 a week in receipts, the net effectis that you have $7,000 less to work with. If you take 10 days to send out theinvoices, it's the same as if you need another $10,000 in working capital torun your business.

4. Offer discounts

This invoicing carrot can speed collections, but make sure that youunderstand how much it is costing you. Some large companies have policies inplace that require speeding payments to earn discounts, e.g., 2% for payingwithin 10 days. But beware: Suddenly offering a 5% discount for payment in 10days could give out the wrong signal.

5. Invoice more frequently

If you are billing customers for time, consider billing twice a monthinstead of once. Billing promptly on the 1st and 15th of the month speeds upimmediate cash flow.

6. Ask for some payment upfront

Instead of just billing for time as it is incurred, ask for a thirdupfront, a third while the job is in-progress, and a third upon completion.

7. Fine-tune the timing of your payables

Take advantage of the maximum allowable time (60 to 90 days) to paysuppliers. Picture it as an interest-free line of credit that gives you moretime to collect accounts receivable without spending money on short-termcredit lines. If your payroll withholding taxes total less than $50,000 peryear, remit the withholding on the 15th of the following month, instead ofthree days after payday.

8. Ask the right people for a loan or investment

Remember what they say about banks: They will lend you money only if youcan prove beyond a shadow of a doubt that you don't need it. Outside investorswill sense your plight and demand onerous terms. This is a time to turn tofriends and family and/or to get creative. Key customers might be able to helpyou out by advancing money to undertake a new product or pre-paying forproducts in anticipation of future demand.

9. Manage your credit cards

Many credit cards offer a cash advance credit limit that is separate (andlower) than the overall credit limit. Take the time to track the balances andcredit limits for cash advances vs. overall purchases separately. Create asimple spreadsheet, and update it as the bills come in. When things get tight,make sure you charge whatever expenses you can to those cards that still haveavailable merchandise credit, but no available cash advance credit. During acash flow crisis, you want to maximize your available cash advances as theyare almost the same as cash.

10. Consider layoffs

While large companies can take advantage of "redundancies" and "synergies"in downsizing their staff, it's more difficult for small business owners. Eachemployee has his/her own specialized revenue-generating abilities. Instead ofletting go entirely, discuss rehiring them as freelancers. It reduces thecosts of health insurance, payroll and stock options for you, and increasestheir freedom and provides time for them to seek out additional work fromother companies to boost their income.

Now what?

Going through these ten steps should give you some ideas of where you candelay payment, speed collections, or find additional cash. "Make the calls,send the e-mails, and write the letters," advises Luhring. "Then get back toworking on your business, making it the success you know it can be."

About LSI

Luhring SurvivalWare, Inc. (LSI) develops, supports and sells financialmodeling and cash flow planning software. LSI released a new version ofSurvivalWare in 2008 that bundles an entry-level Cash Planner with asophisticated financial modeling platform. The Cash Planner is designed tohelp entrepreneurs survive severe cash flow problems by juggling payments tofit estimated cash flow. The modeling platform targets small and medium sizedbusinesses, helping them survive and thrive in the face of financialchallenges.

Customers can use the all-purpose model delivered with SurvivalWare, orone from a growing list of vertical market models developed by LSI and thirdparties. More information is available at http://www.survivalware.com.

To download a trial version of SurvivalWare 2.01 or to receive LSI's freee-newsletter, visit http://www.survivalware.com or call 703-780-2044.

SOURCE Rusty Luhring