3 Ways to Find Hidden Money in Your Business

Even the most successful small businesses run into financial strain from time to time. What's most important in keeping your business afloat is finding the money needed to pay off emergency expenses-bills that have to be paid now. The first place to start finding that money is within your own business. Here are three ways in which you can find money you may not realize you already have:

1. Redeem all outstanding invoices you've issued

Collecting money that people already owe your business is your best start. Sort through all your outstanding invoices, and begin with any that are past due. Call the companies or individuals and request your payment. Be firm; many business owners may be squeamish at the thought of demanding payment, but remember-they already agreed to pay you for your products or services. If they claim they cannot pay in full at the moment, give them the option of transferring their balance to a credit card.

If you don't have enough in past-due invoices to meet your cash goal, begin calling people who have payments that are due soon. Explain your situation very succinctly to your customer. Don't go into details, just mention that you are asking customers to go ahead and pay their invoices early if they can. Offer them a small percentage off their bill, to entice them into paying sooner. You may be uncomfortable requesting early payment but remember-your business is at stake.

2. Temporarily reduce or eliminate your monthly paycheck

If possible, reduce your monthly paycheck or skip a paycheck all together. This will act as a small cash cushion for emergencies and may be a good fix for an unexpected expense-for example, the engine on your moving company's truck needs to have its transmission repaired, but your business does not have the funds available to have it serviced. Think of this as a personal loan to your business. Develop a plan that will allow your business to reimburse you over the next month or months.

While this may be good for a quick fix, you should carefully examine the possible consequences of giving up your paycheck. Ensure that you can meet all the monthly bills for you and your family, including rent, food, electricity, etc. You should also ensure that you have some way of paying for any possible family emergencies, such as unexpected injuries or illnesses.

3. Sell your outstanding invoices to a factoring company

The factoring industry is made of companies who will buy your outstanding invoices. The company will buy your invoices for a certain percent of the amount owed. Generally, this will be about 65 to 90 percent. This is cash you get up front. The company will notify the customer who they should pay and how. It is important to choose a company that will treat your customers with courtesy, to ensure that your current customers remain future customers. When the factoring company receives payment for the invoice, they will pay you the remainder minus a percentage they charge as their service fee.

For example, let's say you had an outstanding invoice for $2000. You sell it to a factoring company and receive 80% of the invoice--$1600. After the factoring company collects and takes out their 5% fee, you receive an additional $300. You will have made $1900 on an invoice originally worth $2000, but you will have received your needed cash up front. It is up to you to determine whether the loss of $100 is worth getting $1600 immediately. If your business is facing an emergency, it may very well be worth it.

For more information on factoring, read Financing Alternative: Factoring Facts by AC writer Morgan Summerfield.

Desperate times call for desperate measures, but when it's your business at stake, you've got an awful lot to lose. However, by taking a close look at your business and using one or a combination of the above methods, you can quickly get back on your feet.