Unconventional Wisdom: Spend Your Cash Quickly

In my article “Some Bad Advice on Cash Flow Management” I mentioned that sometimes conventional wisdom isn’t very wise. In this article, I am going to bust the myth that you should always pay bills as slowly as possible and hold onto your cash until the last possible moment.

There are at least seven instances when you may want to spend your cash quickly:

  1. Early payment discounts
  2. Cash discounts
  3. Volume discounts
  4. Annual payment discounts
  5. Create solid vendor relationships
  6. Hire and retain hard to find employees
  7. Manage your debt

Early Payment Discounts

Some companies will give you the option of either paying in 30 days or paying more quickly, with a discount. The most common discount is 2% if you pay within 10 days, but if you don’t, then the full amount is due in 30 days. This is known as “2/10 net 30.”

Why this a good deal if you have the cash to pay early? It’s like earning 36% interest on your money! The vendor is basically saying...

Continue Reading...
Close

50% Complete

Two Step

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.