How to be strategic when you pay bills
One of the biggest issues in anyone’s profitability is cash outflow. What is cash outflow? It is a fancy way of saying the money paid out by your organization.
When I ask most of our client’s bookkeepers pay their bills, they say: “When we do our check run.”
I push them further to ask if they pay bills before or after the invoices are due; the answer: “When we do our check run.”
So, I tell them to get rid of the “check run.”
Most bookkeepers don’t think about how their work affects the company’s financial operations – they simply do what they were taught in school and made sure the pennies matched. Our new rule is simple: all invoices will be automatically paid on the day they were due once they were approved. Management electronically approves invoices once a week.
Think about it. Do your client’s pay quickly? We’re not suggesting you shirk your responsibilities. It’s just a timing issue. Slow down your cash outflow – be strategic about when you pay bills – and you will win the game.