"Life is Just Brighter" in a $1.2m Distribution Business

But you and you started a cash flow forecasting.

Yeah.

Yes. Every, every Saturday morning I pretty much do a couple things. I look at, you know, every transaction in the bank account. I do my, you know, my historic cash flow of, you know, what I thought was going to come in versus what I actually got.

And I'll just say this, trying to project out when I'm going to receive cash from customers is impossible is that it is impossible to predict out when my customers are going to pay me. I know on average they're going to pay me in 45 days. But to say I'm going to receive this amount next week, it's impossible to project out.

And that's where it's made me really appreciate recurring revenue versus you know, the non recurring when contractors are going to pay me. So I, you know, do the, the cash flow report, you know, look at my bank account, look at every transaction, look at, you know, my, you know, purchase orders, look at my sales orders. But yeah, the cash flow projection and you know, trying to understand when we…

And I heard you say that the previous owners payables were aggressive, meaning when you guys paid your vendors. But that would help your cash flow position because you're holding on to cash and not paying your holding on to cash and stretching out when you actually pay your vendors what you owe them. So I would think that that would be a good thing.

But it sounds like reading between the lines, it can, if you are too aggressive there, it can damage the relationship with vendors. You become a customer that they don't love because you don't pay on time or. Yeah, very, whatever.

Yeah, it will help with their cash flow. But one thing I found out after I bought the business was the business lost a distribution line for a specific kind of pipe due to slow payments from the old owner. But I didn't know that before I bought the business.

I found out through, you know, talking to this person, talking to that person. And the general reputation was a slow payer. Customers love, loved him, great guy, nice guy.

Right. You know, allowed them loud. The owner allowed them to pay him in whatever, 70, 90 days. Vendors, different story.

And even though the seller was a great guy, Nice guy. That's the reputation. Once you have that reputation, it takes a long time to fix it.