By: Randal Roberts
Published: July 19th, 2012
Do you ever dread the task of sitting down at your desk and going through all of the invoices and bills that have accumulated over the past several weeks? I dread it and never look forward to it. Maybe it is because I never seem to have enough money to pay them on time, when due and for the full amount. I can’t be the only one that has experienced this drudgery.
Even though it is a chore it is essential for you and your business’ financial well being, to get them paid on or before they are due. There are three things you need to consider the next time this feeling of drudgery consumes you.
- Avoid paying penalties – Most of your “normal” bills, like utilities, rent, mortgage, etc. carry as much as a 5% penalty for not paying on time. If you look at an average business or home, that can amount to roughly $200 per month, and could go higher, depending on the type of credit that has been extended. That can add up to a lot of money over a full year. What could you do with an extra $200 every month? Additionally, most business creditors allow up to a 2% discount on inventory purchases as well as purchases for supplies and spare parts, etc. If you spend even $10,000 per month on these items, that can amount to another $200 a month savings. Now you have $400 per month extra to use.
- Become more productive – If you truly can save $400 per month, it would be prudent to consider hiring a bookkeeper to handle that part of your business. Paying a bookkeeper $400 per month will probably buy more than just someone to pay your bills. You may even get all of your accounting done for that price and you will not have to dread the task of sitting down and doing it yourself. You may become more productive and spend your time on things that matter more to the success of the business. Your time is too valuable to spend on tasks that have little upside return and large downside consequences.
- Keep your credit in good shape – As you pay your bills on time your suppliers and other creditors will usually increase the amount they are willing to extend to you and the business. This may allow the company to accomplish more and take on larger amounts of work. If you ever need a bank loan, the bank will check your credit via credit reporting agencies and will make calls to your suppliers. If the bank gets nothing but good reports, they will be more likely to give you the loan you need.
Well, this is just a short lesson on paying bills on time, there is a lot more that could be said. Just remember this, it is better to pay on time and get the credit you need, than to always having to explain why you have not paid a bill on time. Good luck.
About The Author:
Randal Roberts has over 30 years of commercial and international banking experience. He has helped more than 2,500 different companies with their businesses. He is willing to help you find the resources you need to start your own business or improve the one that you already have. Visit http://www.accelfs.com/ for more information.
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