How To Improve Cash Flow And Add Bottom-Line Value
By charging purchases, you can hold off on payment and hold on to cash about 25 days longer than with cash or check. Plus, if you time your purchases at the beginning of the billing cycle, you could get nearly two months of time between purchase and payment. Let's say Company ACE charges $25,000 a month on their OPEN Card. By doing that instead of using an alternative line of credit - at let's say a 10 percent annual percentage rate - Company ACE can avoid $2,500 in interest charges.3 Or, if ACE is not cash-constrained, the $25,000 can earn significant savings on early payment discounts with a vendor.