Q: How do entrepreneurs slow the flow of cash out of their businesses?
A: We are in a recessionary economy. As an entrepreneur, have you tightened your spending? Have you cut over-spending? Customers feel the pain much later than you. Now is the time to act. Don’t wait any longer. Be sure your expenses are in line with revenue. Don’t just pay bills with business as normal. In a recession, a vigilant look at expenses can keep cash flowing longer & can help you weather the recession. Don’t build up inventory. Sell off old inventory. Limit travel to client-focused trips. Don’t build up office supplies. That counts as money spent and just sitting on the shelves, not helping you make a sale.
Hi. Lately I have been doing a lot of thinking about receivables and payables. If receivables are what customers owe us and payables are what we owe vendors, why are our payables more than receivables lately? And, if receivables are what customers owe us, why don’t they pay us? And if the customers tell us that the economy is down and they need a longer lead time, don’t they realize the economy is down for our businesses also and our vendors are not giving us a longer lead time?
What to do? Is our best customer still our best customer if they don’t pay us?
It’s tough to know when to push and when to comply. My thought is that we need to be firmer at the onset letting the accountant (or whoever is in charge of bill paying) know 60 days is 60 days not 120 days. Isn’t this a chance to confirm the squeaky wheel really does get the oil? Talking directly to the person who pays the bills is important. I have spent useless phone calls talking to the owner getting, “The check is in the mail,” routine when she has only told the accountant to prioritize bill paying. It is our obligation to make it known we are on the top of that priority list.
Any of this sound familiar to you? Let me know how you handled it.