23. Recapturing the lost cash

May 01, 2026 04:03 · 5:56 · English · Whisper Turbo · 1 speakers

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Lecture Index

0:13

S… Speaker 1 (23. Recapturing the lost cash)

Recapturing cash trapped on your balance sheet requires measuring results and then changing the activities that produce those results. Here are a couple of strategies you could deploy which will positively impact the operating cash flow trapped on your balance sheet. As it relates to receivables, set the customer's expectations up front.

0:39

S… Speaker 1 (23. Recapturing the lost cash)

Here's an example of the conversation which is very different from an invoice or a written agreement that I might have with a new customer. I'm excited about doing this work for you. There's no question I'm going to provide you the product and the service you want and I'll deliver it on time just like we agreed. However, I'm not a bank and I'm not able to provide you with long-term financing. So when I send a bill,

1:08

S… Speaker 1 (23. Recapturing the lost cash)

It means the bill is due, and I need to be paid. Typically, I've already paid the cost of providing the product to use, and I can't stay in business if you string me out. I don't want to have to beg for my money any more than you want to beg me to do the work. Can we have an ironclad agreement? I'll do the work, and I'll do it on time, and in exchange, you agree to pay me within 10 days of receipt of my bills.

1:36

S… Speaker 1 (23. Recapturing the lost cash)

No run-arounds, no delays, no checks in the mail. Agreed? Number two, you get what you tolerate. And what most businesses tolerate are customers who pay when it's convenient to the customer and not according to the original agreement. You can bet your last nickel they pay their light bill on time because if they don't, they're going to be working in the dark. It does no good to have an agreement if you're unwilling to enforce it.

2:07

S… Speaker 1 (23. Recapturing the lost cash)

Be proactive with your customers. Call frequently and repeatedly. The squeaky wheel gets the oil, and the frequent caller gets the cash. Every one of your accounts receivable is somebody else's accounts payable. There's a person in charge of accounts payable in every company. Send that person a $10 Starbucks card and thank them for always taking such great care of you. It works.

2:38

S… Speaker 1 (23. Recapturing the lost cash)

Get a credit card backup from the customer just in case their dog eats your invoice and they attempt to string you out. Stop doing business with people who abuse you by not honoring the terms of your agreement. Now look, every time I talk about this topic, I always get pushback from business owners who will explain to me why their business is different.

3:03

S… Speaker 1 (23. Recapturing the lost cash)

They do business with the government or with healthcare payers or with some ginormous business that abuses everybody. I understand. The question for you might not be how to fix it, but rather how to improve it. Is there anything, and I mean anything, that you could do to knock just a few days off of receivables in total?

3:30

S… Speaker 1 (23. Recapturing the lost cash)

Good. Then start doing that and improve your cash flow. Let me talk to you about inventory. Place smaller inventory orders and place your orders more frequently. Negotiate with your suppliers on the shipping and handling fees. Renegotiate the price in terms of your inventory. Go out to bed and talk to new suppliers who are aggressive in wanting your business.

4:01

S… Speaker 1 (23. Recapturing the lost cash)

Sell off all the obsolete stuff and clean out the warehouse. Dust the shelves and start fresh. Track your inventory closely to see what sells and what doesn't. Stop buying the stuff that doesn't sell and get rid of the stuff that hasn't. Avoid letting suppliers unilaterally stock your shelves.

4:26

S… Speaker 1 (23. Recapturing the lost cash)

They get paid by the amount they stock on your warehouse or on your shelves and not the amount that you sell. Start monitoring shrinkage. This is the inventory that never makes it to the cash register because either it's damaged or one of your customers or employees borrows something and forgets to tell you about it. Let's look at payables.

4:54

S… Speaker 1 (23. Recapturing the lost cash)

Look at all payment agreements and stretch your payment to the last day within the discount period or the last pre-penalty day. Negotiate longer payment terms with your suppliers. Pay bills one time per week and always pay before the penalty period. Avoid late charges. Avoid disappointing your suppliers on payments.

5:22

S… Speaker 1 (23. Recapturing the lost cash)

You will need a favor someday. Besides, paying your bills on time, but not ahead of time, is simply good business. This chart shows you the strategies I've just discussed in a shorthand format. Take a look and see what you can do to release some much-needed operating cash flow from your balance sheet and deposit that cash into your bank account.

This transcript was generated by AI (automatic speech recognition). May contain errors — verify against the original audio for critical use. AI policy

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