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Cash Flow (comics)

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Anytime a startup entrepreneur starts their dream idea the number one thing to keep straight is: Cashflow. In this Bloomburg Business Week article For Small Business, a Cash-Flow Crisis it discusses how tough times affect small businesses even harder. Why?

Net30 Float!

In business lingo a Net30 account means a larger company such as Apple creates account for you (or you create for your customers) so if you purchase something that you will pay them at 30 days after the completion of the job or work. It means that Apple is loaning the money to a business customer for 30 days. But you as a business can create Net30 accounts for your customers, but there are problems with this.

But as the article above states, having a Net30 account and getting paid at 30 days is not the norm these days? It’s more like 60 days, and even up to 120 days or over before you get paid. A sort of Net60 or even a Net120 account.

This means that a small business is going to need cash in the bank to handle this “float” of bucks.

How does one handle this? One way is the get paid for paying early, i.e. such as 5-10% off the bill if it is paid off within 30 days. Check with a CPA or other financial professional to discover ways of getting paid on time. It’s worth your money.

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