When paying the bills on a cash-flow strapped business in which order should the bills be paid?

Answer 1

PLEASE FOLLOW THE FOLLWOING SEQUENCE WISE IN MAKING PAYMENTS

1) ALL TAXES

2) UTILITY BILLS

3) THEN TOP 10 SUPPLIERS

DEAR IT IS A LENTHLY ANSWER

this is another easy one. Phone and hydro can get stretched, ad companies will let you go 90 days before whining; mom and pop landlords are great if you pay the balance of your rent due before the 15th of the month. Next is order of important suppliers. Figure out which supplier you can live without and order hordes of product from them. it fills your inventory all the meanwhile your paying your other suppliers on time and hanging in there. Give the supplier you plan on dumping 4 equal post dated cheques dated 90 days apart starting from 30 days you originally got the product. (yes, stretch payment for 1 full year - they'll accept it)

Fax them a very apologetic note saying your on the verge of bankrupcy and the money will be there on the dates of your cheques. make sure it is too! They won't sue you.

Communicate with your bank officer regularly. If he or she likes you they'll call you when your about to bounce a few cheques. Ive had banks in my start up days hold me to 10K in overdraft (when I had $0.00 overdraft protection) 2 weeks before Xmas because I bought too much inventory. The account was brought up to par just before xmas eve. Guess what? they helped me again once or twice in the future because I stuck to my word.

Keep applying for new credit cards and always pay the minimum payment + 20%. Manage to pay them off and regulary ask for increases. (right after you pay the card off) Run you card through your own Visa machine and use the money as cash...when you have enough cash in your account refund you credit cards through you machine. (avoids getting nailed the extra percentage merchants are charged)

10 years and a few million bucks later, those were the best days....

also, only take advise from people who've done it better than you!!

AnswerAnd always pay the IRS and State government on time. I always say the first three rules of accounting are: debits on the left, credits on the right and don't mess with the IRS. AnswerAs others have mentioned, pay all taxes due first.

Then you have to pay your employees.

Then, get an Accounts Payable Aging report to see which bills are due now, or soon.

Pay current interest payments on loans.

Then, my advice is to pay as many small suppliers on the schedule as possible. These are the people whose goodwill you really need, and taking care of them will get a lot of people off your back. Huge utility companies will take some time before they actually get around to cutting off service, so I would not wait too long, but they would not be a priority payment in a pinch.

If the difficulty in paying is going to be an ongoing thing, you should work with your creditors and make payment arrangements. If you know a payment will have to be late simply because of cash flow issues, explain to the creditor that payment has to be later than you anticipated, and tell him when you expect to pay.

And know that a prolonged inability to pay debts as they come due is a sign of insolvency. The very last thing I would tell a supplier is that my company was on the verge of bankruptcy, even if it were true, unless I was actually in bankruptcy proceedings and I had the authority to tell him (and an ethical reason to). I'd never be able to get anything on credit ever again. You want to reassure your vendors, not terrify them.