Accounts Payable: Avoiding Seasonal Glitches

A CFO explains how she was able to maintain tight controls over her company's accounts payable.

By Jill Andresky Fraser | 
 

Maintaining tight control over accounts payable is always important for a growing business -- but in highly seasonal operations, it's essential. Just listen to Adrienne Glasgow, who until recently served as a partner at and chief financial officer of D. Glasgow & Sons, a $45-million manufacturer of children's clothing in Perth Amboy, N.J.:

"Tremendous seasonality was a way of life. So I had to know everything I could about payables, because there would be times when we would have to tell our suppliers, 'We can't pay you when this bill is due, but we can guarantee that you'll be paid 10 days from now.' Under those circumstances, you've absolutely got to build credibility."

The way to do that is with detailed information. Glasgow used a weekly cash-flow report that rolled out 18 months ahead, including a detailed payables forecasting model, to negotiate payment terms she knew her company could meet. "I tried to learn as much about our suppliers as I could. If I knew their weak moments, I tried to help by paying as promptly as we could. That let them see that flexibility could help both of us."

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Read more:

  • Meet the New Masters of Cash Flow
  • When It's OK to Ignore Costs
  • Why You Should Pay More Taxes

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