Cash In, Cash Out
Whether your company is flush with cash or barely hanging on by a thread, how you manage payables can help unlock its potential.
In January, home product distributor Jeff Schreiber traveled to Dallas for a trade show, a rare opportunity to meet with vendors in a deal-making atmosphere. Schreiber, 30, negotiated a deal to purchase $40,000 in ceiling fans from one of the manufacturers. Fortunately, the supplier agreed to give him until July to pay for the goods. But he also made Schreiber an appealing offer he couldn't refuse.
The vendor would give him a 3 percent discount for paying by May 1, and an extra three-quarter-point reduction for each month he settled the account before that. While a May payment would yield $1,200 in savings, Schreiber would save another $600 by paying in February. Not only that, the early shipment also gave Schreiber a jump-start on sales before any payment deadline. It was a win-win scenario for Hansen Wholesale, his $3.5 million company in Cerritos, California.
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