Cash Flow
Payables are a negotiation, not a chore
The problem
Most businesses pay everything the same way at the same speed, giving up both discounts and float without deciding to.
Why it matters
Terms, discounts and rebates are real margin. They are also the least confrontational lever available to an owner who needs cash.
How to know if you have this
- All vendors are paid on the same cycle regardless of terms
- Early-pay discounts are missed or unmeasured
- Rebate programs are not tracked
- Payment timing is decided by whoever is in the office
How Advisory Motion solves it
- 01Inventory your vendor terms, discounts and rebate programs against actual behavior
- 02Set a payment calendar that captures discounts and preserves float where the discount is not worth it
- 03Quantify each term change before the conversation with the vendor
- 04Protect the relationships that matter by prioritizing them explicitly
Illustrative example
A 2/10 discount worth 36% annualized
One supplier's early-pay discount was worth far more than the line-of-credit rate. Paying that vendor early and extending two others produced a net cash gain and higher margin at the same time.
Illustrative composite · not a client identification
Where this connects