A company’s executives came across excessive cell phone bills, so they asked their manager to review the bills. Naturally, the first thing most people thought was that some employees may be abusing their cell phones to make personal calls. That wasn’t the case.
After doing a little detective work, the manager figured out that the high phone bills resulted from employees having different usage needs and working in different locations. One employee, a frequent traveler, racked up roaming charges whenever he traveled to another country. The company found a better plan to fit the employee’s usage and cut the bill by more than half.
Some clients pay within days of submitting an invoice. Others pay near the end of the 30 days. Both types have been in business for years and continue going strong. Still, those who put off payment until right before the standard 30-day deadline have a slight edge. They keep the money longer.
Occasionally, a client or two would pay late. Fortunately, some businesses have enough cushion that they aren’t affected but not everyone is in the same boat. It hurts the business when they get paid late.
Business-to-business companies typically give clients 30 days to pay for their products or services. These B2B companies also need to pay their vendors within the same timeframe. And it’s standard business practice to wait until the end of the 30 days before making a payment.
It’s like having an interest-free loan for 30 days as you keep cash longer in your bank account. However, late payments can cause the company’s cash flow to snowball out of control jeopardizing other areas of the business and its relationships with vendors. (There’s a difference between being nice by paying quickly and having the needed cash flow to stay in business.)