Cash-flow is king. We've all heard this expression many many times and it's as much a truism for you and your business as it is for any one of your suppliers.
One lesson that was drilled into me growing up was "do as you would be done by" (ie treat others as you would like to be treated). This expression is something I try to live by and dictates most of what I do, or don't as the case may be, every day.
In business we are all subject to the vagaries of cash-flow and the headaches that it brings in juggling and keeping a business liquid and healthy. Many is the time a healthy business 'goes to the wall' due to the terms it has offered to it's clients and the subsequent trials in chasing down delinquent and tardy payments.
How do you like chasing payment or sit waiting 30, 60 or perhaps even 120 days for payment? No, I didn't think you would....and funnily enough nor do your suppliers!!
Personally, I don't intend to build my business on someone else's credit particularly in this extreme low interest environment we find ourselves in - what's the point? Wherever possible, which is in most cases, I settle invoices either straight away or within a few days of receipt.
Why do I do that and not hold onto the money earning interest for 30 days? Quite simply:
1. Low interest rates yield minimal returns over whichever time period you choose to look at, particularly for the small amounts most businesses are finding they have to pay regularly.
2. Quite frankly, and in light of point 1 why bother expending excess time and energy managing and tracking when you could be harnessing your time better?
3. I know what it's like waiting for money I could really do with it.
4. It just feels good to be on top of your finances.
5. Surely if you value your supplier (whatever it is they may be supplying you) then surely it's better to do your bit to ensure their survival than earn that £0.56 of interest?
6. Its a good thing to do and makes you feel good!
I know that this is a relatively simplistic view of cash-flow but let's face it, it isn't the most complex of subjects and if you took a good look at yours I think you would find it's probably a lot simpler than you first thought.
So give it a try, pay it forward - you never know, the universe may give you something back in return as a reward!
coming soonKarl Whittaker from Employee Benefits Collective