Five ways to make your cash flow go further

Without a cash flow, you have no business. Dealing with invoicing companies or chasing them up, for your lingeire can be part of the job in which you hate but is also the thing that is going to keep your business alive.

Some companies want to pay you after 90 days of delivery, some 30 days and others will happily pay you upon delivery, or 50% up front and 50% after delivery.

So what should you ask for?

Well it depends on the company, the bigger the company, the more sway they will have (and it might be non negotiable) on how you get paid. The big boys payment methods usually pay you 30 - 90 days after delivery, and realistically they are the ones that are going to place the bigger orders, so when planning manufacturing and buying the fabrics, can you survive without being paid that long? Especially if you are working to a two-season calendar drop.

Improving everyday cash flow can be tricky, but there are ways to help the cash flow in quicker and out slower.

Ask customers to pay sooner

If you are following the two-season calendar drop (selling Spring/Summer and Autumn/Winter) then technically you’re only getting money in twice a year. Ask customers from the off set to pay a deposit, the bigger companies as stated will probably say no, which you can counter ask them, with paying pro-forma (when the goods are ready to ship) then giving credit and asking for the final amount 30 days after delivery.

Sell Online

No brainer really, by selling your stock online as well, you are able to get a cash flow in all year round.

Negotiate a split delivery

This works well if you are hand making everything. This is a term used when some of the shop wants their Spring/Summer stock early Jan whereby others are happy for mid February. If you are getting everything manufactured then see if the factory is happy with a negotiate split as well, this means that you’d pay for the first drop, then by the time you pay for the second drop you’d have the money in from the first customer.

Ask for extended credit

Develop a relationship with your suppliers and you may be able to ask for extended credit, this may mean setting up an account with them but having a 30 day credit period (or as much as they allow) can make a big difference to your cash flow, if companies are paying you with a 30 day credit.

Get rid of selling into stores

You may view this as a bit extreme, but depending where you want your brand to head and the amount of money you’re making with selling into stores, versus the complications and time that could be spent else where. When I first ran Vanjo, I sold to shops and online, this time I currently sell solely online. As I hand-make all the lingerie, write and freelance I wouldn’t have the time with balancing three little ones to make the quantities that shops want. With all the overheads for wholesale price. It’s not as daft as it sounds, other lingerie brands that wholesaled previously and now just sell online are Ayten Gasson (who also sells in her own shop) and Kiss Me Deadly.

If you are going down selling the route of selling into shops, ensure you have a terms and conditions form which outlines all payment terms and conditions, including what happens for late payments.