The Cash Flow Blog

This isn’t for every vendor and customer, but a quick way to pump some money into your business is to discount a receivable.  I’ve done it before — creating a win/win situation where both vendor and customer walk away thinking they got a great deal.

Here’s how it works

Let’s say you have a receivable for a particular client — a term sale you made with payments outstanding.  For this example, let’s say your customer owes you $3000 on a service you provide.  And let’s pretend that payment in full is  due three months form now — $1000 payable each month for three months.

Let’s also pretend your business is in deep need for money.  You have bills to pay and not enough money to pay everyone.

In this example, what you can do is offer to discount the receivable in exchange for immediate payment. An offer might be to escalate payments in exchange for a 15% discount — or greater.  Not everyone will be interested in such an offer, but some will.

The thought is to look at the money you have coming in and think creatively to bring it in faster.

Have you discounted a receivable or escalated payment in exchange for a discount?  If so, was it win/win?  Would you do it again?

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