The cheapest capital.
WHY IT MATTERS MOST
It costs no ownership and no interest.
WHAT FORMS IT TAKES
Deposits before work Payment in advance, at a discount Annual rather than monthly payment Pre-orders Contracted commitments
WHAT TO OFFER FOR ADVANCE PAYMENT
A discount, priced so it is worth less than borrowing would cost.
HOW TO CALCULATE THAT
What the capital would cost from a lender, over the same period.
WHY THAT COMPARISON
It sets the maximum sensible discount.
WHAT ELSE IMPROVES CASH POSITION
Invoicing immediately Shorter payment terms Chasing promptly Deposits on everything
WHY THOSE MATTER MORE THAN THEY SEEM
Most small businesses are short of cash while being owed money.
WHAT TO EXAMINE
How long customers actually take to pay How long you take to invoice
WHY THE SECOND
Delayed invoicing is self-inflicted and common.
WHAT SUPPLIER CREDIT PROVIDES
Capital, in effect, by paying later.
WHAT TO NEGOTIATE
Terms, once you have a payment record.
WHAT TO BE CAREFUL WITH
Extending your payables while your receivables lengthen.
WHY
It works until one customer fails.
WHAT TO DO BEFORE SEEKING EXTERNAL CAPITAL
Exhaust this.
WHY
It is faster, cheaper, and it demonstrates demand to any investor you approach afterwards.
