Shorter Payment Terms for Customers

You can strengthen your liquidity in the short term by shortening payment terms for your customers. If you recognize that liquidity problems are coming your way, don’t be afraid to openly ask customers about shorter payment terms. You will be surprised that many of your customers will show understanding. Of course, your customers also want to benefit from paying earlier than previously agreed. Grant your customers cash discounts to ease your liquidity bottleneck. After all, “cash is king.” A slightly higher future profitability is of no use to you if you don’t survive the moment because of an impending liquidity bottleneck.

Take such steps in advance so that you have the liquidity you need from them in good time. But also agree with your customers directly on the possibility of returning to the previous payment terms when your liquidity development allows this again. In this way, you will not permanently weaken your profitability.

But be aware that the underlying problem with short-term and one-time liquidity gains is not solved. Therefore, carefully analyze where the liquidity bottleneck is coming from. Is it a one-time bottleneck because an unplanned payout is coming up? Or does your business fundamentally lack earnings power?

In addition to shortening payment terms with customers, there are also often opportunities to dispose of assets that are not essential to operations.

In addition, there is often the possibility of selling finished goods inventories to customers with targeted campaigns.

Reducing non-essential assets is another way to generate liquidity.


What are your challenges?

Restart Dialogue