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How do you handle your Net 30 parts accounts?


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  • 2 weeks later...

Flash Sale + Social Proof


Flash Sale + Social Proof


Flash Sale + Social Proof

I'm going on my third year of business and it seems that just until recently, that I've finally learned how to effectively manage & use the net 30 account to maximize cash flow. For me it really came down to reclassifying in my mind whats the parts bill really means other than it being a huge bill at the end of the month. I always came from the mindset to try to pay off debt quickly as possible & don't carry big balances. I found this very difficult when trying to apply this principal in my business. One would need a huge reserve of cash on hand for parts, this is not usually practical though.

 

I always viewed using credit as bad or avoid it when possible. But now, i realize the huge advantage of using the trade credit we get from our suppliers is a valuable asset to us. Without it, my draws that i take would be very erratic & unpredictable. I now embrace the idea to use OPM (other peoples money) to work for me so i can be profitable. I view my parts bill total as a gauge on how my business is growing...as my bill gets higher so does my business level. For me, I had to stop looking to the bill as a expense but rather look at it more like a investment of sorts.

 

How do other owners tackle this monthly bear?

 

I think you are really starting to understand your business. Take it one step more and do the math to find out what you need to break even (pay all you bills) and what you really want to net. Anyone can break even and survive. Real money is made when you consistently hit above break even and make profit dollars. It takes a little work and you may need help from your accountant, but find out your true cost of doing business and work the business every day to be profitable.

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  • 2 months later...

Exactly you need to know what your operating costs are and figure that into a monthly, weekly or daily figure. Once you do that then you can figure what you need to charge. So your charges may change accordingly. If you need 2k to break even then you figure off that what to charge to make a fair profit. You may account new tool purchases. profit draws etc in deciding what you need to charge.

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