With so many businesses looking for better ways to manage cash flow issues, I wanted to introduce some business owners who have developed interesting strategies. I’ll be sharing insights from Cardmembers I’ve spoken to, and I invite you to share yours, as well.
The first comes from Mark DiPasquale, co-founder of Archimedia Solutions Group, which manages on-site print facilities. Given that his company makes heavy capital investments (e.g., copiers and printers) but incurs revenue over longer periods of time (clients pay for use of the machines), he seemed like a perfect person to talk to about managing cash flow. He told me that the keys for him are timing and communication.
Mark has fine-tuned his schedule for payments – incoming and outgoing – so that he is able to use his Plum Card as a financial tool. “I always pay early when using the Plum card in order to take advantage of the discount, which saves me around $1,000 a month. I’m happy, and my vendors are happy because they’re getting paid immediately.”
He believes building strong relationships with vendors – and other partners – is critical. “From the day we started the business, we took care of our vendors and treated them like partners. Always pay vendors on time and treat them well. If you’re a good customer and keep them informed of any changes, they’ll be more receptive of any special requests.”
Mark takes the same approach with financial service providers and customers. “You need to over-communicate with financial partners and make them feel like part of the business equation. Bankers hate surprises, even good ones. If you think it’s going to be a slow quarter, let them know and then listen to their advice. They’ll tell you what the bank is focusing on, like leverage ratio, and you’ll know what to work on. I know it seems like it’s all about numbers, but it’s not. They also look at the integrity of the people behind the business.”
Likewise with customers, be conscious of timing and communication. “Communicate with them as soon as a problem arises so receivables don’t get stretched. Communicate before then, even, so you develop a relationship where they feel comfortable in telling you about potential issues in advance. Just as you should be able to talk to your vendors as partners, you want your customers to do the same with you.”
If you have advice for other business owners on how to better manage cash flow, please e-mail me at marcy @ openforum.com. You can also follow me on Twitter @marcyshinder, and follow OPEN Forum @openforum.
For more information on Archimedia Solutions Group and co-founders Mark DiPasquale (Cardmember since 2000) and Jane Simmons, visit their Web site at www.archimediasg.com.