Cash flow is king, especially in slow times. One way to speed up your cash flow, of course, is to shorten your terms, say from 60 days to 45.  That frees up over $1million for a business with $25 million in annual revenues. But when the economy is flagging you may not want to ask your customers to take shorter terms. Here are two ways to improve cash flow without pushing your customers to pay more quickly.

First, tighten up your billing process.  It’s not uncommon for a company to take as long as two weeks to get invoices out the door. If you’re a $25 million dollar company, every working day you take preparing invoices ties up almost $96,000!. Cut three or four days from your processing cycle, and you’re talking real money.

Second, offer discounts to customers who accept shorter terms. If you’re now offering 45 days, you might suggest a 3% discount to anyone who accepts 30. On a $10,000 order, that will cost you $300. But if  getting the $9700 fifteen days early helps you make a payroll or pay a vendor without drawing on your line of credit, you’re well ahead of the game. And remember that everyone else is looking for savings now. A discount policy for people who pay promptly may get you some new customers.

I had a great conversation with a top-exec yesterday about the changing relationship between huge corporations and the small businesses that sell to them. His take was that the way very large companies have used their power to drive down prices at their smaller suppliers has done some serious damage to many of those suppliers. As a result, some of the big players can no longer depend upon their smaller partner. He thinks that lots of the big guys are starting to realize that and re-evaluating their relationships with smaller partners.

I was , therefore, interested to read this post on Anita Campbell’s Small Business Trends:

Large businesses and small businesses increasingly operate in a finely-balanced and symbiotic ecosystem. Each needs the other. The major shift is that big companies slowly but surely are recognizing this. Instead of the typical competitive or vendor-buyer relationship that big companies and small businesses traditionally have had, the relationships are getting much more complex and interrelated and cross-reliant. This manifests itself in innovation programs, such as Proctor & Gamble’s trail blazing www.pgconnectdevelop.com, to things as simple as big companies plowing money into websites and resource centers that have nothing to do with the product they are selling, necessarily, but focus on general advice to small businesses, such as Intuit’s Jumpup.com. The result has been an explosion of free resources available to entrepreneurs and small businesses supported by Corporate America.

As Anita says, “This is a key trend for all of us as small business owners and entrepreneurs.” Think about your relationships with much bigger customers. Are they ready to treat you like a partner rather than a desperate suitor? What are they willing to do to help you serve them better?

It might be a conversation worth having.