Building a reputation for reliability is a well-known strategy for growing your business, but what about the savings to be made by avoiding late fees and taking advantage of early payment. You have to pay your bills, no two ways around it.
It’s to your advantage to pay them in a timely fashion if you want to build that trust with your creditors (plus, some say it’s good karma), however since we’re talking about outflow, we need to consider good ol’ cash flow.
There are ways to pay your bills in a smart way to make sure that your cash flow remains positive:
- Use the payment term to its fullest. If you have a thirty-day term on a bill, go ahead and use the thirty days to build up the cash. That way, you’ll have a better handle on what your cash flow looks like than if you simply write a cheque the day you receive the invoice.
- On the flip side, see if there are discounts for paying suppliers early. (Sounds familiar, no?)
- Ask about flexible payment terms when you make a deal with a vendor. You’ll never know if you don’t ask and it could help you out in a pinch. Be cautious with this though: asking for flexible payment terms before a deal is done can raise suspicion.
- Set up Electronic Transfer Funds (ETF) payments. That way you can pay immediately when a payment is due, but won’t have to let go of the funds before you’re ready.
- Build a real relationship with your vendors. If they trust you and you’re honest with them it could go a long way to making your life easier if you need to ask for an extension.
The golden rule in business is to buy on credit and sell for cash, never buy for cash and sell on credit.
As Cash Flow Strategist and professional bookkeepers Accountant Ready Books can assist with identifying your cash flow problems. Once detected we can then implement cash flow strategies to defeat cash flow crisis helping to grow your business with solid cash flow management.
