This is the fourth part in a 5 part blog post series about dealing with late or non-paying customers.

Covering cash shortages is a top priority for business owners. Exactly what approach should you take when solving a cash flow issue? Use this quick list to jump start your decision process.

1. Tapping into your personal savings: Owning your own business always carries an element of risk, but when personal assets are being used to finance it, the risk can increase dramatically. With credit markets currently at a virtual standstill, tapping your personal assets to fund your business may seem like a quick and easy way to access the required capital– without having to give up part of your business to a venture capitalist or angel investor.Those looking to finance their business on their own may find that they have a lot of personal assets available to them: cash savings, personal credit cards, property on which a loan can be taken out, a 401K plan or other retirement account that can be cashed in early, or a life insurance policy that can be used as collateral on a loan.Cash savings are readily available and, depending on your situation, can be plentiful. There is generally little or no cost in getting access to your cash savings and, since this is your own money, there are no interest or loan costs to pay.However, if you use savings or other assets for a business venture, if your business fails, your assets are lost. Research by The Wall Street Journal suggests that people often over-commit to their businesses to the detriment of their personal financial health. A 2012 survey they did revealed that 38% of small business owners said they’d be forced to retire later than expected, as their retirement savings were tied up in their businesses.
2. Borrowing from a personal acquaintance: When it works out, borrowing money from a friend or family member can provide emergency funds.But the obvious caveat here is that, should anything go wrong, it could end your relationship with that individual. No matter how carefully you budget and plan, unforeseen circumstances arise all the time. Therefore, borrowing money from someone you know carries an inherent risk. Unless you’re prepared to lose the relationship, it should probably be used as a last resort.Perhaps, you’ve already borrowed from a personal acquaintance but you know that turning to this source again could damage the relationship. If you want to keep the connection intact, it’s best to find another solution.Don’t forget, borrowing from a family member, friend or acquaintance also leaves you vulnerable to possible equity dilution. You know what’s best for your business and relinquishing any portion of the decision power will weaken your control over business matters.
3. Get short-term working capital from Reliant Funding: If you’re looking to get financing for your small business in today’s economy, you may have noticed it’s not easy. Despite a multibillion-dollar government bailout, banks are still feeling the effects of the subprime-lending crisis that peaked in 2008 and nearly buried the industry. The result has been a steep decline in capital at many banks and U.S. government-sponsored enterprises, which has tightened credit around the world.You may be eligible for a small business loan based on your gross sales. Reliant Funding is a leading provider of financing solutions to small and medium sized-businesses. The loan application process is relatively easy, and you receive help every step of the way. There are other benefits to working with Reliant versus traditional banks, including minimal paperwork, clearly defined terms and maximum flexibility.

• Read Late or Non-Paying Customers Part 1 of this series to learn about dealing with late or non-paying customers.
• Read Late or Non-Paying Customers Part 2 of this series to learn about modifying payment terms.
• Read Late or Non-Paying Customers Part 3 of this series to learn about hiring a collection agency.
• Read Late or Non-Paying Customers Part 5 of this series to learn about firing a client.