What’s your cash position? Are you actively controlling your cash flow or are you a victim to slow paying customers?
A cash discount plan may be your secret to survival moving forward, if executed properly.
John Hopper, currently serving as Director of Operations for Capital-Plus,Inc., shares his experience based on a lifetime in credit management and collections. He believes his recipe can help any business control and really maximize their cash position. The secret – employ and manage an effective cash discount plan.
This involves several basic steps:
- Introduce a price increase
- Notify clients of price increase and new payments terms, including a discount. i.e. We appreciate your business. In order to address changes in the marketplace, we will be increasing our prices by 3% with payments due in net 30 days. However, we will offer a 2% discount for payments made within 15 days.
- Stand behind this – don’t allow customers to take the discount at 30 days. Utilize a debit memo or charge back invoice.
- Review Payables: Take advantage of any discounts available and if no discount is offered, pay that vendor in reasonable terms, but not before due date.
“You can’t be afraid to do what is necessary to collect in a timely manner and protect your biggest asset – cash. Time is money and money drives your business operations.” JPH
Email John Hopper for more information or questions: [email protected]