The Cash Gap: Identifying and Eliminating It

By Samantha Hadley

The cash gap exists in all small businesses. It is the time between you paying for your product or materials and the customers’ payment clearing into your bank account. For many small businesses this cash gap could extend from 30 to even 90 days. During that time, businesses are financing the money through lines of credit, credit cards and business loans.

A cash cap can costs a business a portion of their profit. In small business, profit is the only thing fueling you and the businesses growth. This is especially true for businesses that do not factor the cost of money into their profit margins.

“Most companies figure the price of their product like this: (material cost + Labor + selling cost + overhead + profit = Price)” said Nate Thorne of CFO On Call, LLC. Unfortunately this figure does not factor in the cost of financing over time. Although this cost is small on a monthly or daily basis, it adds up over the year.

Over time this cash gap can bleed a business dry. Thorne created his business to offer this kind of advice to small business owners. So far he has found many businesses that are having trouble can begin there, internally in fixing their finances for the future.

How to Calculate Your Cash Gap

Day one will be the day your cash goes out, this is when you pay your supplier for the product. Add the amount of days for the product to reach the customer. Then add the amount of days you provide for your customer to pay you. Your total is your cash gap. (Also illustrated in the picture.)

If your cash gap is 30-days and you are paying 2 per cent per month on your line of credit, over the course of one year, your cash gap is costing you up to 24 per cent of your yearly profit margin.

Eliminating the Cash Gap

As a small business owner there are various ways you can reduce or eliminate your cash gap.

  • Set-up credit terms with your suppliers.
  • Offer cash discounts for customers that pay immediately upon receiving the goods or service.
  • Be proactive in your receivables, if your customer has a 30-day term, contact them at the 15-day mark.
  • Use financing programs that offer you more time, such as charge cards with longer payment terms that are interest free.
  • Take deposits on goods and services to limit the amount of funds you are financing over the period of your cash gap.
  • When pricing products or services, factor in the cost of financing money over time.
  • Develop a partnership with a 3rd-party financier so you get your money sooner and the financier worries about the customers payments.

The cash gap can be detrimental to a small business.

‘When the cash gap is properly managed, a business will make a profit,” Thorne reiterated. Look internally, as well as externally and be proactive in tracking, managing and reducing your cash gap.

Via: Business Finance Store

Gain Trust With Your Customer and Grow Your Business Simultaneously

By Antonio Javier

Trust is the foundation for any company. When customers do not trust the company, its mission, products and services, clients will walk away and customers will shop elsewhere. Gain the trust of customers and your company is on the right path for success and growth. Adopting security features and effective methods of protecting client information are essential for gaining trust. Identifying companies that excel in data and privacy protection will help you emulate those strategies.

Most & Least Trusted Companies


Companies that are the most authentic with the greatest amount of trust are often the most successful and profitable. According to Ponemon Institute, protection against ID theft plays a key role in combating privacy concerns and building trust. When a company has excellent identity theft protection, confidence in security not only increases, but confidence in products and services increase as well. Companies need to take measures that gain trust by reducing the risks of exposed sensitive client information.

According to Lance Whitney on, companies in the Internet and social media industries are the least trusted companies for privacy. Reasons for distrust stem from geo-tracking tools, data breach notifications and data shared without consent.

Mozilla, however, is the most trusted Internet company because of the extensive measures taken to reduce security risks and enhance privacy protection. The non-profit takes a trusting online environment seriously and strives to always provide products and services that users can rely on.

Trust, Protection & Credibility

Although many Internet companies have struggled with consumer trust online, re-establishing client confidence is possible. According to Alice Hansen, a contributor for, providing real information when dealing with online clients enhances trust and provides credibility. Offering real data, including contact information and names, can reduce distrust and skepticism. Use a real name and offer details about top management officials on the company website, for example. Companies that are open and communicative with clients and customers will be recognized as trustworthy and worth doing business with.

Beyond providing detailed information, Alice Hansen suggests that companies also provide a clear and comprehensive privacy policy. Provide a short statement about how personal information is used when customers shop and make purchases online, for example. Clearly listing the privacy policy and providing a contact page for inquiries will also ease user concerns. Feel free to link to a more comprehensive private policy that gives customers details about how information is treated by the company and how it is protected.

As a company that values customer confidence, offer premium online security features. Optimal safeguarding practices make it easier to avoid the risk of security breaches. Online companies should install anti-virus and anti-spyware protection. A superior business will always protect the interests of the client. Provide clear details about privacy policies, adopt safeguarding customer data as your top priority and communicate your dedication to that responsibility to your users.

This guest article is courtesy of Matthew Bryant, a freelance writer from Kansas.

Via: Business Finance Store

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