

What kinds of cash managment and financial practices do your startups use? - TheCondor

I have what I feel is a somewhat naive set of questions.   I've been part of 4 startups but always on the engineering side of things both as an engineer and a leader.  I've been exposed to a lot of the financial aspects of one company that was successful.   At this new company,  I'm simply an individual contributor with no leadership responsibilities.<p>So my question is, what kinds of cash management practices are typical in your startups?    This current company is regularly slow paying vendors, as a matter of business practice.  Typically we don't pay until past 60 days, and we have money in the bank.  The one other company where I was exposed to the finances,  we would let companies know when we couldn't pay them and we tried to be forthcoming the few times it happened.  The CEO says it's just aggressive cash management and unlikely to change.  I know a lot of large companies slow pay because of their bureaucracy,  it's the first time I've seen it at a small company when it wasn't needed.    Personally, I feel bad about it as a lot of the people we are slow to pay are fairly small and independent vendors.<p>Secondly,  we bill monthly for our service,  we need to send out
between 200 and maybe 500 invoices a month, not an incredibly large number.  Some of the early sales work was sort of fly by the seat of the pants and so there is some differences in what customers pay.  We've been trying to use salesforce.com.   What I've seen is that we don't regularly invoice customers,  sometimes we won't bill them for 3 or 4 months at a time. Our more sophisticated customers have actually complained about it.  At least one time our CEO had to give credits to a company because we didn't bill them regularly and they were upset with it(?!?)  How many companies kind of have these growing pains?  Everywhere else we've been rock solid on the accounting and billing,  I've never been to a place that has had problems like this,  are these legitimately growing
pains or serious red flags?
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spitfire
These are all typical issues of a successful service company. No surprises
there, so congratulations!

Slowly paying bills is simply good cash management. You get to collect
interest for 60days on that cash. If you paid right away you wouldn't.

As for the billing, I'd get on that right away. Get the cash into the account
accruing interest as soon as possible.

