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drphilsauto

How do you handle your Net 30 parts accounts?

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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?

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