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TIL a 30-day payment term actually costs you money, found it in a book on small business finance.
The author broke down how a net 30 invoice at 5% inflation means you lose over 4% of the real value by the time you get paid. I always just sent terms without thinking. What's the shortest payment window you've ever gotten a client to agree to?
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blairm7728d ago
My plumber gets paid same day, so 5% inflation seems a bit overblown.
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drew93428d ago
Honestly, my plumber charges way more than he did two years ago for the same jobs. I just paid $400 to fix a leaky faucet that was half that before. His parts cost went up and he said he had to raise rates to cover his own bills.
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alice81728d ago
We got our best client down to net 15 by showing them the math on our financing costs. It took a real conversation about how late payments affect our ability to stock materials. Now they pay faster and our cash flow is way smoother.
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ruby_bell472d ago
Wait, is that the real key? Like @alice817 just being straight with the numbers? Maybe we all try to be too polite about money... I've sent those "friendly reminder" emails that get ignored for weeks. But showing the actual cost, that it hurts your supply chain... that makes it real for them. It's not a late fee, it's why their next order might be delayed. Makes them part of the solution instead of just the problem.
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