Nick Ypsilantis, CEO of AccuFile, has learned to live on a relatively small line of credit while minimizing debt.
Living on a $50,000 credit line isn't easy when you run a $1-million service business -- especially when your customers pay slowly. But Nick Ypsilantis, CEO of Boston-based AccuFile Inc., has learned to do just that, and his methods would be helpful to anyone looking to minimize debt.
AccuFile provides library staff and services to other companies, including law and accounting firms, for which it sends out monthly invoices. Basic as it sounds, mailing the invoices promptly is an essential ingredient in the company's success formula. The sooner invoices are sent, the sooner AccuFile can start counting the days until collection. "We have to get them out within 10 days," Ypsilantis says.
The company routinely phones customers "just to check in" and logs each contact in a notebook so that the calls are spaced out and not annoying. The topic of the calls turns to collection only when the customer is more than 30 days late in paying. That, combined with the rapid invoicing, has gotten the average collection time down to 41 days.
With cash consistently flowing in, AccuFile has no need to dip into its credit lines. Ypsilantis looks at cash-flow statements every week. By comparing his total cash at a given moment with his projected monthly costs, he gets an idea of how much total cash is left to cover unprojected costs. That means that he dips into credit only when it's utterly necessary. And even then he's using as little as possible.
Reviewing cash flow enables him to flag expenses that are unexpectedly increasing. Three years ago he spotted a rise in AccuFile-sponsored lunches and ball games with customers, so he put a freeze on such events. Last year, when he eyed a $2,000 spike in marketing costs, he bought a printer so that he'd rely less on an outside shop. Two years ago AccuFile increased its credit line to $75,000, but Ypsilantis still uses as little of it as possible. Ideally, the amount he borrows is small enough that he can pay it down each month, thereby avoiding yet another expense: ever-rising interest rates.