Squeezing Vendors: Get the most from suppliers At the grocery store, it's how you choose the most delicious fruit. Why not apply the same method to secure the best possible terms from your vendors? Squeeze 'em! 1) Secure volume discounts Determine who you spend the most money with and make sure they know about it. To find out, print the Vendor Last A/P report. Then contact them to negotiate a volume discount. Or consider using other vendors more often than in the past. 2) Always use POs POs remember what was agreed to -- both about dollars and scope of work. They are your backup should you need to deal with situations that are outside the originally agreed-to work. 3) Determine when it pays to take vendors' early payment discounts A rule of thumb is to take a discount if you could not invest the money and earn more than you'd save. For example, 2/10, net 30 terms equal 36.73% a year! If you can't beat that with an investment, take the discount! 4) Pay vendor invoices when due Unless it pays to take a discount, pay vendors only when invoices are due. And know the ones to call for an extension (with no interest charged) should you get into a bind. Take advantage of the "weekend float". Send checks out on Friday. This keeps your money in your account a little longer (and earning more interest, right?) 5) Place vendor on hold If situations warrant, place vendors on hold. (Each vendor's file has an "on hold" checkbox.) New POs or invoices can't be added for a vendor who's on hold. Include a user-defined reason why the vendor is on hold, as well.
By Elaine Hilmer In today's business environment, an entrepreneur is most likely to succeed when using a budget to measure business performance. A budget forecasts cash flow -- how money will move through your business -- and is the dollars-and-cents implementation of your business plan. A budget is your key to success. When setting up your budget, it's important to be realistic (perhaps even a little pessimistic) and consistent. Once your budget is set up, don't put it away! Budgeting is an ongoing process and the budget should be reviewed and revised regularly. Regular attention will spotlight any upcoming shortages so you can prepare for them. As a practical tool, your budget must be realistic and easy to use. There are many methods for creating a budget, so choose one that you're comfortable with. The simplest method is the top-down approach using last year's actual figures and adding a percentage. As you review your budget, update each expense to allow for changes.		Budgeting for large capital items is crucial. Capital spending, if not controlled, can have a debilitating effect on cash flow. To assess the viability of a project, express it in financial terms based on how much revenue it will produce or the expense it will replace. Consider the benefits and risks of the expenditure, allowing for any additional expenses it might generate. Also, if you use short-term financing, include the cost of financing in your outflows, and be sure to include sales and income tax payments. When you drop your actual figures into the budget you get a projection of the year's results immediately. By benchmarking your predicted cash flow against actual agency performance, you'll see how money is moving through your business. Managing your cash flow with budgets is a powerful tool, and you'll be amazed at the level of comfort you get when you know what you're dealing with. Elaine Hilmer is a Clients & Profits consultant. She can be reached at (212) 868-3232.