Printer Friendly

The weekly lament.

EVERY WEEK SOMEWHERE (everywhere?) in the United States the lament is heard: How am I going to meet payroll this week?

It's the single biggest concern for many small businesses. If they can't pay their employees, the employees will quit, they will be unable to fill their customers' orders, and that would be the end of their business.

But does it really ever have to reach that point? Do they have a small credit line with their bank but don't use it because they don't want to pay interest? This interest, incidentally, would be less than $10 for one week on a $5,000 draw down at 8% for one week.

Can they lean on a long-time customer to pay their bill a week ahead of time and maybe overnight the check this time?

And what about the supplier who is causing them the cash crunch because his bill is due this week? Isn't it possible that if they spoke to him a few days in advance and told him his check will be a little late this month because of slow collections he'd say, "I understand. I've been there myself."?

If the owners are used to drawing a weekly paycheck or some other form of regular remuneration, could they tap some personal funds to tide them over?

And perhaps the most common reason for the lament: Why didn't I project my cash requirements better?


Any one of the solutions suggested above would help once, but if the lament goes on week after week more drastic measures are needed.

* Is the weekly payroll too high for the level of business being produced?

* Can the selling prices be raised modestly and not lose customers?

* Can costs be lowered by "shopping around" for lower prices?

* Where were the cash projections off? Did we spend more than we projected, or did we collect less?

* Did we ignore the budget and give in to the temptation of a "good" buy?

The main purpose of this article is to get small business owners thinking. Many of them have been astute enough to solve more stringent business problems, so with their experience and a little foresight, their weekly lament should go away.
COPYRIGHT 2007 Institute of Management Accountants
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2007 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:SMALL BUSINESS
Author:Radowitz, Jerry
Publication:Strategic Finance
Geographic Code:1USA
Date:Apr 1, 2007
Previous Article:Bankruptcy taxation.
Next Article:Struggling to survive: facing seemingly insurmountable challenges, CFOs need to redefine their role and initiate a paradigm shift in the way they...

Related Articles
Pope hits at shame of Nazis.
President's Radio Address to the Nation - January 21, 2006.
Letter: Some rich food for thought.
By the numbers: vacation time.
The SBA's Recovery Act role: the agency has implemented new programs to get credit flowing again and has several more on the way.
SBA lending down dramatically.

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters