Need To Improve Cashflow? Consider A Prepay Discount!
Adam Linnemann, The Green Executive®
“TIP OF THE WEEK” on Turfs Up Radio!
“Need To Improve Cash Flow? Consider Prepaid Discount Certificates.”
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The Green Executive® was founded in 2017 by landscape industry veteran Adam Linnemann. Our mission is to run intimate, close knit landscape industry peer groups and consulting services with a personal touch. The Green Executive® also provides one-on-one and group coaching through accountability, strategic planning and financial budgeting.
Keeping your business in good financial standing requires a strong understanding of cash flow. When companies run into cash flow issues, it could spell hardship for the business or even worse – forcing them to close their doors for good. Obviously, the goal is to always keep more coming in than flowing out. Let’s take a look at the flow of each:
- Cash is coming in from customers or clients who are buying your products or services. If customers don’t pay at the time of purchase, this incoming cash flow is coming from accounts receivable.
- Cash is going out of your business in the form of payments for expenses, like rent or a mortgage. Monthly loan payments also get accounts as cash flowing out of your business as well as taxes and other accounts payable.
When it comes to balancing cash flow and handling accounts payable and accounts receivable – it’s all about timing. If you’re extending too much credit to clients, you might run into a situation where your incoming cash flow is poor. Hence, it’s time to consider pre-payment discounts.
Some business owners cringe at the idea of offering a discount to have clients pay upfront. Yes, the explicit cost of this strategy is the discounted rate. However, have you taken the time to consider the implicit benefits of having more predictable, routine cash flow?
Additionally, you should consider the fact that prepay discounts might make it easier for you to avoid having to take out a business loan – which might end up costing you more in interest payments over time.