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Jun. 15, 2009: Some things to do — and not do — to generate cash quickly

June 15, 2009
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Cash.
That’s all that counts right now, CASH. Not profit, not earnings per share, not partner capital accounts. Cash. And cash only.
So what do you do to get some cash? No, we’re not talking about 7-11 finance. And double flooring is a sure way to get a “Go directly to jail” card. No, we’re talking about legitimate — desperate, yes — but legitimate ways to get, and keep, a little more cash.
First, what you don’t do. You don’t lean on your flooring. Those guys can show up in a Mayflower van and start rolling your (OK. Their) inventory out the door without even so much as a thank you ma’am. It’s theirs. And after they have buttoned up the back of that truck and pulled away, your showroom floor is going to look just a little bit silly with nothing but empty kick-stand impressions in the carpet. No, you don’t mess with the flooring.
Another thing you don’t do: You don’t keep the sales tax money. Not only does that belong to your fellow citizens, but the state can walk in and put their guy right next to your till with his hand out for your customer’s cash. Not the best PR move, is it? But they can do it. And those credit card deposits? Guess where they will go when you really get these guys mad. One document from them to your bank, and suddenly all deposits to your account are swept out before you even see them. No. You don’t mess with sales tax.
Or payroll taxes either. This one will take a little longer for them to get around to you, but they will come. There will be a polite meeting at first, but if you don’t come up with a plan and follow it, you are dead meat. In short order, they will be competing with the sales tax people to see who can jump on your bank account first. No. You don’t want this game to happen on your field. But if you’re already there, at least keep filing your 941s. First, there is a penalty for simply not filing, and second, if you don’t, they will estimate what they think you owe, and it is a bear to get them to back away from their estimate.
So, pay your flooring. Pay your sales tax. And pay your payroll taxes. Don’t do it, and you are on the fast track to having those attractive chains draped across your front doors — a little message to all your customers that you might be having a few problems. And, they probably won’t believe that sign in your window that says you are “closed for inventory.” Yeah. Right.
So what do you do?
There are some things that will help. Here are a few.
First. No more free storage in service. Charge two days to everybody, and then take it off if they pick up within 48 hours. They’ll get the message.
Next, hammer your contracts. Make double-darn sure that every one of them is purrrfect — no errors that will get it kicked back to you, costing you days without the cash.
Now, you know what “hammer” means, don’t you? It means you don’t mail the contract, you run it. You don’t just drop it off, you hand it to your personal friend at the bank or credit union (They are your personal friends because you made them that with your cheerful smile, friendly handshake and the fact that you always remember their name). And if they are giving you a check, you send a runner to pick it up. If it is a direct deposit, you’re watching for it. Any hiccup, and you’re back to your friend at the bank to get it back on track.
And speaking of the bank, you are going to reconcile your account daily, online. This little game has some hard and fast rules, and one of them is you have to know exactly where you are, every second. It’s a little like Halo. You’d better know where you, and your opponents are, every second, or you are toast. So reconcile that bank. Don’t play the float, because there is no float. Know everything about your account, and never, never, never issue a check betting on the come. Once the overdraft charges start, there is no stopping. What was just hard now becomes impossible. The bank will always get their cut first, and that little bit of missing cash will cause you even more bank charges. You’d think they planned it that way.
Stretch your cash by waiting to the last minute to pay your bills. The phone, the power, the trash, the water — last minute. All of them. They will always warn you, and you will have time to react. Actually, you will get very adept at understanding their lingo. You will know exactly when the jig is up.
Vendors, suppliers, the uniform people, the radio station, the landlord — stretch them all. And if you can’t pay them with money, be creative and look for other ways. Years ago, my friend Don lost his job, fell on hard times and owed me about $400. In he walked one day with his fine guitar in hand — handed it to me, grinned and said “Could we call it even?” We could. I did. And I still enjoy that fine instrument — as well as my good memories of Don — to this day.
And finally, sell stuff. Sell before you ever borrow. Your excess display equipment, birthday bikes, obsolete parts, that old shop truck and the trailer that you won’t use until next summer’s flea market. Sell it all. You don’t need back-up and you don’t need more debt. You need cash.
Desperate measures? No. Just good sense. My great-uncle Pete Ethington employed about 200 Casa Grande cotton-pickers in 1930s Arizona. Payday for them was every Friday afternoon. My dad could remember being in Uncle Pete’s office on Friday morning, and watching him work the phones: Selling corn, hay, beans, cotton, flax, whatever else he had to make payroll. Uncle Pete died with millions. He got through it in much worse times than what we have today. He did it, and so can you. Keep smiling. This is fun, remember?

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