Written by David Lowrey, Owner of Stress Free Property Management
As a Wesley Chapel Property Management Company, we have a hard and fast rule that vendor bills are paid weekly. Why? Well, I got this idea from an owner of an apartment community I met 15 years ago. Every time he entered the property manager’s office, this guy would turn over the “Bills to be paid” accordion folder and shake it. If any bills dropped off, he would gently admonish the property manager. You see this guy remembered how much he struggled with cash flow when he ran a smaller construction company. Clients were notorious for delaying payments 30 to 120 days. This put a tremendous amount of pressure on this guy’s business.
When you think about it, most Wesley Chapel property management companies and any other small business will net 10-15% of revenue if they are well run. If customers delay payments 120 days, the small business owner must borrow off credit cards or not take a salary to meet payroll and overhead. A lot of bigger clients (Fortune 1000 companies) delay payment so they can collect the interest earned on the money for the extra time. Smaller clients delay payment because they are not organized, don’t recognize the importance of paying their vendors fast, or they are being stretched by their own clients.