Moving a renewal and a supplier date can fix a cash squeeze without borrowing; a forecast built from reorder dates shows the squeeze ahead of time; and over 13 weeks, a line draw cost $367.17 less interest than a 12-month loan in the invented repair-bill case.
Improving cash flow at a Lawrenceburg, TN building supply store by moving a software renewal and a supplier due date
Illustration only, invented figures. A building supply store pays its point-of-sale and inventory software once a year, $4,380, and the renewal falls in the same week as a supplier statement of $12,600 and a payroll. Nothing is wrong with the store; three bills simply share a week.
In this invented case, two calls can fix that without borrowing. The software vendor may agree to monthly billing, $365 a month instead of $4,380 at once, and the supplier may agree to move the statement date by two weeks. Neither is certain, but both cost a phone call. When the gap remains after the calls, a business line of credit draw covers a short squeeze, and a working capital loan covers a longer one.
A cash flow forecast built from reorder dates at a Lawrence County, TN auto parts store
Much of an auto parts store's spending follows its own stock-order calendar, so a forecast can start from those dates and show the tight weeks before they arrive:
- List every recurring order with its usual day: the weekly stock order, the monthly battery order, any quarterly tire buy
- Add the payroll dates, rent, loan payments and software or insurance bills
- Enter expected deposits by week, from last year's same weeks and recent sales
- Subtract, week by week, to get the closing cash for each week
- Mark any week that closes below the cash the store wants on hand
- For each marked week, note whether moving an order would fix it or whether outside money is needed
A store that finds one tight week may be able to move an order. A store that finds the same tight week every month has a pattern worth a conversation about a line of credit or inventory financing.
A 13-week window for a repair bill at a Lawrenceburg, TN building supply store: line draw or short term loan
Illustration only, invented figures. A building supply store's delivery forklift needs a repair costing $8,640. Its 13-week forecast shows room to set aside $960 a week from week 5 through week 13, nine paydowns in all, which clears $8,640 exactly.
| Way to pay | Payments | Interest |
|---|---|---|
| Line of credit draw at 13.4% a year, simple daily interest, $960 paid down weekly from week 5 | Nine weekly paydowns of $960 | $199.83 |
| 12-month term loan at 11.9% a year | 12 monthly payments of $767.25 | $567.00 ($9,207.00 repaid in all) |
The line draw costs $367.17 less interest because the money is out for 13 weeks instead of 12 months, but it works only if the store can set aside the invented $960 a week as planned. If the forecast cannot carry the weekly paydowns, the smaller monthly payment of the term loan is the safer fit, at a higher interest cost. The 13.4% and 11.9% are invented; an actual rate and term would be in a partner's offer, if one is made.
Topics for Lawrenceburg, TN readers, from store payroll to a lease-or-own choice
The articles here take up costs and choices that Lawrence County, TN owners weigh, each with its own invented example:
- Payroll and stock money for stores, and which product covers which gap
- Three ways a restaurant can fund a kitchen: an equipment loan, a working capital loan or a cash advance
- A frozen drink machine, a freezer case and shelf stock at a station store, and what stays outside this site
- An inspection machine, a bundle of smaller machines and longer customer terms at a plant
- Leasing or owning equipment, with both totals worked out
- Short-term funding for an operating business, and when a short term fits and when it does not
For equipment choices before then, the equipment financing page compares a loan, an equipment finance agreement and a lease.
By Wrenway Funding · Updated
