Fixing your cash flow with your accounts payable

Having a healthy cash flow will help your business remain successful. You need to have a quality accounts payable process set up in order to fix your cash flow and to make sure you have plenty of money to operate your business. One of the best ways to fix your cash flow is to make sure you aren't paying your accounts payable the next day, you want to try and stretch them out as long as possible so you have plenty of time to actually acquire the funds from your accounts receivables to pay for them.

Tip # 1 - Negotiate with vendors
The best way to lengthen the amount of time you have to pay your accounts is by working out arrangements with your vendors. Some of them will offer you up to 90 days to pay your accounts if you have been a good customer for their business in the past and if they can trust you to maintain your accounts without defaulting on them. Even extending to 45 days from your original 30 can be huge foryour business and it can give you just a little bit of extra time you need to convince your customers to pay their bills so you can pass on the money to your vendors. Work out a dating term that is easy for you to manage for your business and will be able to help you have the time you need to acquire the money. Always ask about the dating terms before you start working with a vendor and try to get one that is longer.

Remember when you ask a vendor to extend payables to you; they are essentially paying for your order. This means you need to be able to pay it as soon as you can as they don't like to wait long for their money as it can easily eat into their cash flow money as well.

Tip # 2 - Talk about slow-paying
Another option many businesses turn to is a method known as slow-pay. Slow-pay is something you need to arrange with your vendors when you initially become one of their customers. Slow-paying simply allows you to pay the invoice late if your customers are not making their payments on time or when you have cash flow problems. If you foresee cash flow problems, tell the vendor as soon as possible so they can adjust for it. Just know that slow-paying is not something they will take to easily and you will need to avoid doing it often. If you do it more than 1 or 2 times, they may start to question your business books and they may stop doing business with you or they will require payments up front.

The economy is not favorable to a lot of companies right now. Even though it is starting to come back, a lot of businesses are still suffering from the recession and they are having a hard time. You need to be able to pay for you needed expenses like your utilities, rent, and payroll. However, you still need money to pay for your inventory. To reduce inventory costs, start placing smaller orders. While this may increase your markup costs, it may be the only way you can remain in business while you are trying to get your sales to go back up.

Try your best to meet your monthly payment obligations as best as possible to avoid damaging your business credit. You also want to avoid losing a particular vendor because of your inability to pay your accounts payable in a timely manner. Keep in touch with your vendors and let them know what is happening ahead of time instead of just defaulting on your accounts payable.