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At my first startup, checks were the industry standard and we naively thought that we could change behavior by introducing modern payment tools to our customers
by seanmccann 10y ago
At my first startup, checks were the industry standard and we naively thought that we could change behavior by introducing modern payment tools to our customers.
It turned out that our customers used checks because it helped with their cash flow. They could tell us they "cut a check" on Friday, mail it on Monday, we'd receive it on Wednesday, and the money would be in our bank account Thursday. They basically were able to hold onto that cash for an extra 5 days, compared to a wire transfer.
- DINKDINK 10y agoIt would seem this is only helpful if you have more outflow of payments than inflow. If other customers/suppliers are using the same tactic, all it does is slow down delivering products and services.
- zhte415 10y agoAccounts Payable and Accounts Receivable: Generally, for services provided, Accounts Payable aim for 60 days after service provided, and Accounts Receivable aim for 30 days since service provided. I dislike it, and have a far nicer relationship with companies that pay on-the-spot. Indeed, I bend over backwards for such clients.
- tamana 10y agoHave you tried moving your pay deadlines up 5 days, or raising your prices to cover the interest?
- seanmccann 10y agoMost American small businesses would be out of business if they had to pay even 1 day earlier than 30 days (or whatever the industry standard is). Most pay well past the due date. They need to wait the industry standard to get paid themselves. Business runs on credit, and even big businesses operate paycheck to paycheck.