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How to get free credit without burning bridges

Written by: Michael Smyth

Article Overview: You lay the wad of envelopes out on the table. A quick scan tells you that there will be more bills than cheques. As you open each one in turn you mentally add up what is owed and what you have received. The big payment you are expecting isn’t there and the deficit is bad news for your ailing bank account. A story familiar to many business owners and a problem which the business owner must grapple with immediately.

How to get free credit without burning bridges

Why immediate action needs to be taken
In business, cash-flow is king. A great product or good business idea is useless if cash-flow is not under control. It is as essential to your business survival as water is to your own survival.
We all know that without water we die. But without a regular supply of water we can’t function properly. Brain function deteriorates, energy levels dip, you become more prone to viruses and disease, and overall you become very sluggish.

It’s the same in business
Without cash, your business becomes sluggish. Instead of thinking about how to grow your business, you are worried about paying the bills. You are distracted. You can’t think properly. Your business suffers. These are the indirect costs but there is also a direct cost to your business.
How poor cash-flow costs you financially
The direct costs occur in two ways. First, if money is going out but not coming in, either you are paying interest or you are losing interest. Secondly, you have no money to reinvest in your business: so your business is stagnant. You can’t make any money without borrowing further, which is an additional cost. That’s why as soon as you have a negative cash-flow you need to take immediate steps to reverse the flow. Faced with that situation, most business owners simply chase the money that’s owed. Sure that’s really important, but stopping the cash-flow out of your business is equally as important.
How to get free credit
The first step is to get all the invoices that need paying and work out the last possible date they must be paid by in accordance with the supplier’s terms. Do not pay any invoice until it is due. This may sound obvious, but it is surprising how many people pay all of their invoices on a certain day, even if some are not actually due. By leaving your invoices to the last possible day for payment, you are effectively getting an interest free loan from your supplier. Use it wisely to prop up your own cash-flow. However, that alone may not work.
The biggest mistake made by business owners
If you still need credit, the next step is to negotiate extended credit terms with your suppliers. This means you actually have to ring and ask. However, most business owners fail to do this basic step. Instead, business owners allow the payment date to pass and wait to be chased by the supplier. Only then do they negotiate extended credit terms. This is a fatal mistake because if the supplier has had to chase you, it will be less sympathetic to your cause.
Why you are likely to get what you want
Suppliers understand cash-flow problems. After all, they are business owners just like you. If you ring up before the date for payment and ask for extended credit terms, there is a pretty good chance they will give them to you. In fact, most suppliers would find this very refreshing, because it means they won’t have to waste their time chasing you. Also, your suppliers would much rather give credit terms than risk not getting paid at all.
So, make this courtesy a regular practice in your business, and you make it more likely that you will negotiate similar and larger extensions in the future when you really need them. Miss a payment without alerting your supplier and your chances of negotiating future credit terms start to decrease. Do it too often and your credit will be taken away completely. That could be the nail in the coffin for your business.

What to do when you leave the post office
So, when you leave the Post Office clutching your invoices, immediately sit down and work out a strategy for how you will pay them. Don’t pay any until the final date and then take the largest and make a diary note two days prior to the payment date to call your supplier. Finally, get on the phone to your customer and get that money in!

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Article Tags: business owner, cashflow, credit, payment terms, suppliers



Related Forum Posts
Re: Burn all your bridges inorder to succeed?? - [quote="BuzzAroundBooks":x11o039o] Some people are very self motivated, while others are lazy and need to create a sense of urgency to get themselves moving toward their goal. For instance, I was just watching a television interview on a mixed martial arts fighter who admitted to being lazy and burned all of his bridges in order to succeed. He sold all of his possessions, got in his car and left his family and friends behind to pursue his dream until he eventually made it into the UFC (Ultimate Fighting Championships). When you have literally nothing to go home to, it can drive a person to do great things. At times, burning all of your bridges is what it takes since "bonds" between you and others can actually be a distraction.[/quote:x11o039o] As my fraternity brothers and I said in college, "there is nothing that motivates us so much as the imminence of failure." For my personal fitness I definitely have to burn bridges; I need to be left alone for months in order to reach my fitness goals.
Re: Burn all your bridges inorder to succeed?? - HI Guys, Great conversation! But I think we are forgetting that Napoleon Hill actually said to 'burn the boats" which meant that you have no way to go back. it doesnt mean burn your bridges in todays context of networking, referrals etc. By burning the ships, soldiers were forced to get off the island only by being successful. Like 'quitting is not an option'. I think that statement is still very relevant today, where many people start but then stop pursuing their dreams. Jude
Online payment systems?? - What your business will be charged for processing credit cards will consist of several factors, including: • Your average dollar per ticket • Your overall sales volume per month • The type of credit card - for example rewards cards will cost you more to process than a debit card • How often you submit your batch (the batch consists of all the credit card authorizations made) daily you'll get a better rate than if you wait several days to do so • If you swipe a credit card through a terminal you'll get a better rate than if you manually key in the card information Generally, as a new merchant, you're going to get one of the best "discount" rates - the percentage fee taken out of each sale. I work for one of the largest credit card payment processors in the United States, so if you would like more information, please feel free to contact me.
Re: Burn all your bridges inorder to succeed?? - [quote="Tami Szabo":3rpvrmbh]I hear what you are saying, Kevin. In other words, sometimes "creating the need" is exactly what gets us moving! I think it can work when you know you are ready and you BELIEVE you can. However, I believe it's not the only route. One way is to "create a need" without having to burn the bridge. If you are working full time, you can make "small needs" which cause you to grow at the pace you want to. For example, if someone is struggling to write a book, they might arrange a spread out series of speaking engagements on the topic of the book. The time commitment requires them to get writing the speech for each date. Then they can simply translate the speech to the book. So, how can you create a "small need" in your current entrepreneurial endeavour? This is when a Coach comes in handy as you clarify what you want and create an accountability plan to help you stay true to what you want. That's why so many business people and corporations pay for Coaching. The return on investment can be quite remarkable! Have fun thinking of ideas! Tami[/quote:3rpvrmbh] Hi Tami, I think it really depends on the individual. Some people are very self motivated, while others are lazy and need to create a sense of urgency to get themselves moving toward their goal. For instance, I was just watching a television interview on a mixed martial arts fighter who admitted to being lazy and burned all of his bridges in order to succeed. He sold all of his possessions, got in his car and left his family and friends behind to pursue his dream until he eventually made it into the UFC (Ultimate Fighting Championships). When you have literally nothing to go home to, it can drive a person to do great things. At times, burning all of your bridges is what it takes since "bonds" between you and others can actually be a distraction.
Re: Ever been scammed... - a credit check runs for about $25 here too. Have you guys ever wondered why we get so many pre-approved credit cards on the mail? I've heard that car dealers sell your credit reports to those companies.


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