Today, the Wall Street Journal published an article about a study that found companies with annual revenues exceeding $5 billion sped up their collection of cash from customers while slowing their own payments to suppliers. As a response to the credit crunch, big businesses have found they can rely less on external funding and bank lines if they can bring cash in faster and hold on to it longer. They have been using that cash they save to pay off debt or invest in other parts of the business. Meanwhile, the study found that businesses with less than $500 million in annual sales generally took longer to collect cash and paid their bills faster than in the same period a year ago.
You don’t have to be big to improve your cash flow and use more efficient accounting practices to better finance your business. For tips from NY Report experts, read “Managing Receivables & Payables for Improved Cash Flow” and “Fix Your Flow.” In today’s economy, vendors have become much more flexible with their payment terms in an effort to keep business. Let’s stop financing big businesses and let our cash work for us.
Today’s article is available to Wall Street Journal online subscribers here.