How Companies Can Hold On to Their Cash in a Tough Economy

Summary

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When a Long Island-based cooking equipment maker found itself short on cash, the firm wanted to make some quick sales. So the company did what any manufacturer might do: It offered deep discounts and extended payment terms on bulk purchases to its biggest customers.

Will the company lose money on the deal? Possibly. But the goal isn't simply to make money; the objective is to save the company by increasing cash on hand. If the firm has to turn the order into quick cash, it stands ready to tap a factor - a company that will pay for the receivables in exchange for a 20 percent return.

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Extract

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How Companies Can Hold On to Their Cash in a Tough Economy

"At a time like this, sometimes you have to bite the bullet," said Mitchell Zachary, a partner at the Fuoco Group, an accounting firm in Hauppauge, who advised the cooking equipment maker. "If you have to take a lot less than you were expecting to get, evaluate that decisio...

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