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View Diary: Not All Small Businesses Need Loans for Payroll! (85 comments)

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  •  Are you a bank? (0+ / 0-)

    by ctkeith on Tue Apr 21, 2009 at 08:09:01 AM PDT

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    •  30 days is the limit for any businness (0+ / 0-)

      If your allowing 90 days for payment you are out of your mind and will soon be out of business.

      by ctkeith on Tue Apr 21, 2009 at 08:10:50 AM PDT

      [ Parent ]

      •  By Milestone (3+ / 0-)
        Recommended by:
        blindcynic, nextstep, chrome327

        Well, if you're working on something where you get X% upfront and Y% when it's done (or any other mile-stone combination), then you may have a decent gap between milestones.

        Or even if it's "within 30 days", if someone's late with a payment, you still have to make payroll.  Or if their 30 days is on Tuesday, and payroll is Friday, you need the money on Friday.

        There's a fundamental difference between short-term unsecured loans to a profitable small business, and longer-term secured or unsecured loans used to build/expand a business.

      •  Ever heard of the rag trade? (0+ / 0-)
      •  Gov't contracts are SLOW in paying... (1+ / 0-)
        Recommended by:

        Yes, the usual accounts receivable are 15 or 30 days, unless you have contracts with the gov't.

        One branch of my family in USA, owns a construction company.  They are 3 brothers, electricians (one is now deceased), and have about 50 employees.  They put in the lighting along the interstate, highways, and do some municipalities.  

        Their usual repayment has been anywhere from 3-6 months.  They only do emergency work after Thanksgiving and before Valentine's Day.  (One of my uncles is named Valentine, and is slightly superstitious).

        "We are what we repeatedly do. Excellence, then, is not an act, but a habit." -Aristotle

        by Aidos on Tue Apr 21, 2009 at 09:03:09 AM PDT

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      •  Not really true... (0+ / 0-)

        lets say you just got the bid on a big consulting project for a government agency...90 days may be a normal payment cycle...or your contract may have payment based on milestones instead of hours which could mean 120 days...there are a variety of reasons why you would have that delay in cash flow...

        In addition, in my business, good customers have been moving from 30 days to 60 days and in some cases 90 days because their customers are stretching them out...

        Your scenario is a textbook case...and also a steady business not trying to grow your business which would require paying payroll for consultants on the bench for 30 days or so before the project starts...

        And no I am not a bank...just a small business person...

        Obama - Real Leadership for a Real Change

        by dvogel001 on Tue Apr 21, 2009 at 09:11:49 AM PDT

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      •  Fantasy (0+ / 0-)

        We have customers who pay in Net 10, and customers who pay a few days late on Net 60 (and in fact most of our international customers pay in advance). In 22 years in business, we've never written off a bad debt.

        What your suggesting is that I should give up hundreds of thousands of dollars in sales, that cost me at most 2% or 3% out of 20% and higher (mostly higher) gross profit because you think 30 days is the limit.

        Doesn't make a lot of sense to me.

        Je suis Marxiste, tendance Groucho

        by badger on Tue Apr 21, 2009 at 10:05:54 AM PDT

        [ Parent ]

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