Communication is Everything
Sooner or later, you have to pay the bills. However, how you pay them may help increase your cash flow and build better vendor relations at the same time.
Customer #1: The business was experiencing a cash shortage. We were looking for ways to increase the cash flow and noticed that the customer was paying the vendors net 30, which is normal for many vendors. However, we believed that if we proactively communicated with our vendors and explained the situation, we could extend the timeframe in which we paid the bills. By communicating with the vendors, we were able to negotiate extended payment terms to net 45 days. While this does not seem like much, extending payment terms by 15 days will essentially create another $500,000 in cash if your monthly payables are $1 million.
Customer #2: Again, another business was experiencing a shortage of cash. The customer was getting several collection calls daily, which tied up the Accounts Payable staff and reduced their productivity. Rather than schedule full payment for each vendor each month, we communicated with the respective vendors and paid them a smaller portion of the balance due each week. Although the customer was not able to pay the full amount due, as long as the vendors were receiving “something” on a weekly basis, they were content and stopped the collection calls.
Crosslin Entrepreneurial Business Services (EBS) is here to free you up to spend time doing what you do best. Outsource your accounting and CFO needs to someone that has been doing this for years. We have the experience and expertise to help you make your business more profitable. Let us do what we do best, so you are free to do what you do best.
Please contact us to help you find cash in your business.