Frederick, I think that your idea here is a very good way to run a business. I believe it is something that most business do aspire to, and would i think help them to build a much strong more stable business.
This is something that i could have done, i have always had more then sufficient capital at my disposal to cover the order's without incurring debt, however i do believe that i what i have actually done has taken advantage of debt to further profit. To date as i mentioned debt has not cost me anything it has actually made me money, using my supplier account and credit card, has some months allowed me to put anything up to $25,00 to $50,000 extra into short term interest bearing deposits. This may not add up to a lot on small amounts for short periods but when you can put $20,000 in an account at 7%pa for 30 days without it costing you a cent, you can make hundreds if not thousands of dollars per year in additional interest.
While i am sure that this method will not work for everyone because you do need to pay attention to payment deadlines and keep a close eye on your money it can really play a good part in some business that have a quick turn around on selling product to cash in the bank but dont have to pay for the product straight away. I do agree that it is probably not the recommended method for financing a business if managed properly i think it can provide a good additional source of income for the business.
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