Managing Business Debts

Payables and receivables might seem like routine tasks that have to be performed as part of a business's daily operations. But if they're not managed strategically, they can cause serious cash flow problems, even if your receivables list seems impressive.

This is where the analogy of a game of chess comes in. Just like in chess, where you need to make strategic moves to outsmart your opponent, you need to manage your receivables and payables strategically to stay ahead in the game of business.

As Thomas Edison once said, "Good fortune is what happens when opportunity meets with planning." By planning and strategizing how you manage your receivables and payables, you create an opportunity for good fortune to come your way.

Managing payables and receivables is like managing two of the chess boards that the financial manager and strategist must position in a more favorable order for your company. Under a perfect scenario, you would receive all your payments against receivables on the first, and all your payables would be due around the 10th. This would allow you to run the table and pay all your bills, and still have money leftover.

But the reality is that this scenario is not common, and it takes a strategic approach to solve this problem. This is where a skilled financial manager comes in, who can assess the available options and find ways to change the receivables due date and the payables due date in a way that benefits your business.

The key is to handle this problem delicately, without risking the relationships with your clients or customers. Sometimes, a credit line can be a helpful banking product to bridge the gap between the time you start working on a client and the time you receive payment on your receivables. But this needs to be handled in the most intense and diligent way, paying back the credit line as soon as you receive payment on the receivables.

As a business owner, you need to be diligent about managing your financials and not rely too heavily on credit lines or one-time influxes of cash. It's important to have a solid, strategic money management system in place that accounts for payables, receivables, and other financial variables, like taxes and payroll.

At Molin and Molin, we're experts in managing these types of financial challenges. We understand that managing payables and receivables is a complex and strategic process, and we have the experience and expertise to help you develop a sound financial strategy that will keep your business running smoothly. Remember, good fortune is what happens when opportunity meets with planning. Let us help you plan for a successful financial future.