Q: My main supplier has cut my credit terms from 60 days to 21 days, and I can't collect my receivables quickly enough to maintain a positive cash flow. I'm also having to turn away customers that want 30 days to pay. Any advice?

A: Yes. Stop looking to banks and suppliers as your only source of credit. Though the economy has started to recover, small business credit is still tight, and gun-shy banks and suppliers are cutting lines, not increasing them.

That's why more and more small businesses are turning to factors (companies that purchase receivables at a discount) to obtain the working capital they need to survive. Unlike a bank, factors don't charge interest. Instead, they buy your receivables at a small discount, advance you 80 percent to 90 percent of the invoice amount, and charge you a monthly service fee (typically 2 percent to 3 percent) until the money is collected.

"Advances are made as receivables are created, affording you the cash to pay your vendors while also extending terms to your customers," says Adam Altman, vice president of client services at Newtek Business Services, a New York City provider of business services and financial products to small and medium-size businesses through the United States.

"Accounts receivable financing offers greater flexibility than conventional financing, and deals typically close within two weeks of application," he says. The downside is that, if the invoice takes longer than expected to collect, you may end up paying more for the money than you would with a credit line from a bank--that is, if you can get one.

There are also web-based receivables exchanges springing up to help small businesses close the cash-flow gap. The Receivables Exchange, for example, allows qualified sellers to sell their receivables to the highest bidder. Be sure to shop around for the factoring solution that best fits your company's needs before you sign on the dotted line.