Nothing can impact a business more dramatically than not being able to make payroll one Friday. Proper cash flow management starts on the first day you begin your busi- ness. When Robert, Kim, and I started CASHFLOW Technologies, Inc., we agreed that no purchase would be made if it were not justified by an increase in sales. In fact, we often chuckle about our strategy for increasing book sales early in 1998 so we could buy a $300 copy machine. 338 Rich Dad's Guide to Investing Our strategy worked, and by December 1998 we were able to replace that $300 well-worn copy machine with a new $3,000 one. It is this attention to detail in the early stages of your business that will set the tone for your success. A good cash flow manager reviews his or her cash position daily, looking at cash sources and needs for the next week, month, and quarter. This allows him or her to plan for any large cash need before it becomes a cash crisis. This type of review is imperative for a company that is growing quickly. I have listed some cash flow tips that may help you in structuring your business. Each step applies to your busi- ness whether it is an international business, a single rental unit, or a hot dog stand. Initial Corporate Startup Phase: • Delay taking a salary until your business is generating cash flow from sales. In some cases, this may not be possible due to an extended development period. However, your investors will be much more supportive if they see that you are sharing in the development process by "investing your time." In fact, we advise keeping your full-time job and starting your business part-time. By delaying taking a salary, you can re-invest sales to help grow your business. Sales and Accounts Receivable: • Invoice your customers quickly upon shipment of goods or when services are provided. • Require payment up front until credit has been estab- lished. Require that credit applications be completed before granting credit, and always check references. Standard credit forms are available at business supply stores. Cash Flow Management 339 • Establish a minimum dollar amount for orders before granting credit. • Establish late-payment penalties as part of your terms and conditions-and enforce them. • As your business grows, to speed up the receipt of cash, you may want to have your customers pay their bills di- rectly to lockboxes or directly to your bank. Expenses and Accounts Payable: • Many businesses forget that a crucial part of cash flow is managing their own bill paying. Make sure you pay your bills promptly. Ask for extended payment terms up front. After you have paid timely for two to three months, ask for additional extensions on your payable terms. A supplier will usually extend credit for 30 to 90 days to a good customer. • Keep your overhead to a minimum. Before purchasing something new, set a goal for increasing sales to justify the expense.