Cash strapped? You don’t have to get shot!


We urgently need help!!

You see, we are always running short of cash, being a very small metal-working  business, a single proprietorship, a family business,  with very little resources.  Maiksi ang pisi namin.

Sometimes,I delay payment of my workers’ salaries.  And I can see this makes them feel so bad.  I think one or two of them want to shoot me.  And I cannot blame them as many of them have families to feed.  I do not want to put off payroll payment again because I am very scared to get shot. (Joke.)

But there are priorities for the cash that trickle into the business, like utility bills, rentals, and payment of supplies, not to mention a bank loan that has to be amortized.


Jessie Rodriguez

Cavite City



You did not give too many details regarding your cash-shortage problem.  You also didn’t give any idea regarding the cash management system that you have.

So let me answer you in general terms.

First of all, workers can understand delayed payrolls occasionally.  But not if it happens frequently.  Workers need to feel secure.  Otherwise, they leave or would do half-hearted work, commensurate to the half-hazard way they are compensated .  So, try mightily to meet payroll dates not only because you don’t want to get shot but because it is the right thing to do by the people who work for you.

There are ways to raise cash immediately from within your operations and thus avoid getting shot.

Look around you.  Do you have assets no longer needed in your operations?  And old machine or equipment? Old furniture or furnishings? Sell them to obtain cash in a hurry.

Do you have old or excess inventory which you can sell at a bargain?    Buy one-take one?  30 per cent off?  40 per cent off? Such promos will also bring in cash quickly.

You can also limit the credit you extend to your buyers and try to follow up your creditors to speed up your collection of receivables.

Tighten up on your inventory so they are at a minimum.  Do not produce much more than you can sell.  In the same way, do not purchase supplies and materials more than you can use for a batch or an order.

But the best way to avoid being cash strapped is to master cash flow analysis.  Consider the following guidelines from

  1. Stay current.  The foundation of a good cash flow management is knowing precisely how much cash you have on hand today.  This means you keep your business accounting separate from your personal finances and keep your books up to date.
  2. Understand tomorrow’s numbers.  Financial projections are a must for any business not only because they establish revenue goals for the future but also because they help build a cash flow analysis.  Model a number of what-if propositions.  For example:  what if you fail to snag any new customers in the next few months? Answering this will make you more nimble should these scenarios occur.
  3. Embrace lean operations.  Identify and eliminate duplication or wasted effort at all stages of your business. Re-examine each of your business process with a view toward removing bottlenecks.  You will save money in the long run.
  4. Maintain a just-in-time inventory.  If you sell products, don’t keep more than a week’s worth of safety stock unless you can confidently see high demand.
  5. Don’t splurge.  If you need computers, buy second hand ones.  Do business in your home instead of renting space.  Negotiate for bulk discounts from suppliers.
  6. Delay payments.  Look into negotiating longer-term payment plans with your suppliers.  Most of them will be happy to work out an arrangement as long as you can provide steady monthly payments.  The cash you don’t use immediately can be plowed back into your business.
  7. Rush collection.  If you have receivables, try to collect as soon as possible by issuing reminders.  Consider doing credit checks before accepting clients.
  8. Employ credit judiciously.  If you can’t work out longer repayment terms with your suppliers, make maximum use of your credit cards.  Charge business expenses to your cards at the beginning of the payment cycle.  That way you can delay final payment by as much as 45 to 60 days.

Good luck or else learn how to duck.  (Joke!)

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