In This Episode
One of the things nobody tells you about when starting a business is that you’ve unknowingly signed up to play the bank. Every time you provide credit to a customer you always risk having someone like Wimpy from Popeye who will promise you the world for that hamburger today! So knowing how it feels to have some customers ask you to play the bank, is it OK for you to do the same thing to them?
Like many questions posed to a small business owner, the answer has a lot of gray area in it. It’s not a simple yes or no but more of a case of how and when do you have your vendors play the bank for you? Here are some times when it makes sense to have your vendors play the bank for you:
- Cash Is Tight: if your cash flow is tight, for whatever reason, leaning on your vendors for better terms can be a good way to help ease some of this pressure. You might be amazed at how much relief you’ll feel by delaying payment by 15-30 days or getting some deferrals on payments.
- Vendor Not Delivering: nothing gets discounted faster than services already provided. On the flip side, the best way to get ghosted by a vendor is to pay them fully before their work is finished. If you have a vendor who isn’t delivering as promised, it helps for you to delay payment as that might be your best or only leverage.
- Launching Something New: it’s always best to give yourself plenty of runway when starting something new. Nothing worse than starting something you can’t finish. If you’re a little tight on cash then be sure to reach out to your vendors for some favorable terms.
Deciding to utilize vendors to help ease some of your cash flow burdens is a normal thing to do in business so don’t feel bad about utilizing this technique. Just be sure you use it strategically.
People, Companies and Resources We Mentioned in the Show
- Wimpy from Popeye (https://en.wikipedia.org/wiki/J._Wellington_Wimpy)