2 ms·

AR: Accounts Receivable (money owed to you) AP: Accounts Payable (money you owe) APR: Annual percentage rate (usually converted from a different timeframe so

AR: Accounts Receivable (money owed to you) AP: Accounts Payable (money you owe) APR: Annual percentage rate (usually converted from a different timeframe so you have a consistent timeframe to compare with other metrics) Retainer: A fee that you pay to get priority from a consultant, which may or may not come with services included.

michaelbuckbee 8y ago
There's another overarching term that needs put in here: Cash Flow: the balancing of AP and AR so that you can stay afloat. Say your startup needs $10k a week to meet payroll. You have $20k in the bank and Accounts Receivable of $100k. "On paper" you have $120k. Cash flow wise you have 2 weeks of money left on hand. This situation is in constant tension as: - Large companies stall regularly on paying or require terms like "Net60", aka you complete the work, then send them an invoice, then they can take 60 days to pay that. - Public companies have to report their financials and will often manipulate their AP schedules to help "massage" their numbers. I was once told bluntly: "our CFO said we aren't paying any more invoices this quarter" - The reason large companies do this is they are also trying to balance their cash flow (just at a larger scale). The two general things to do to help with this situation: 1. Keep invoicing tight, bill as often and in as small as increments as possible. Better to ask for $20k every 2 weeks than $40k at the end of the month. 2. Offer discount terms where they pay less if they pay earlier.
- tixocloud 8y ago
  Well said. Very common scenario when it comes to retail, grocery stores, import/export businesses. Great article on this topic by Tomasz Tunguz of Redpoint Capital: http://tomtunguz.com/timing-sales-cashflows/ http://tomtunguz.com/timing-sales-cashflows/

2 ms·

AR: Accounts Receivable (money owed to you) AP: Accounts Payable (money you owe) APR: Annual percentage rate (usually converted from a different timeframe so

by tixocloud 8y ago

michaelbuckbee 8y ago
There's another overarching term that needs put in here: Cash Flow: the balancing of AP and AR so that you can stay afloat. Say your startup needs $10k a week to meet payroll. You have $20k in the bank and Accounts Receivable of $100k. "On paper" you have $120k. Cash flow wise you have 2 weeks of money left on hand. This situation is in constant tension as: - Large companies stall regularly on paying or require terms like "Net60", aka you complete the work, then send them an invoice, then they can take 60 days to pay that. - Public companies have to report their financials and will often manipulate their AP schedules to help "massage" their numbers. I was once told bluntly: "our CFO said we aren't paying any more invoices this quarter" - The reason large companies do this is they are also trying to balance their cash flow (just at a larger scale). The two general things to do to help with this situation: 1. Keep invoicing tight, bill as often and in as small as increments as possible. Better to ask for $20k every 2 weeks than $40k at the end of the month. 2. Offer discount terms where they pay less if they pay earlier.
- tixocloud 8y ago
  Well said. Very common scenario when it comes to retail, grocery stores, import/export businesses. Great article on this topic by Tomasz Tunguz of Redpoint Capital: http://tomtunguz.com/timing-sales-cashflows/ http://tomtunguz.com/timing-sales-cashflows/