Page 138 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Unit 9: Financial Considerations

However, you may also decide to tweak your approach based on the particular customer or size Notes
of the payment due. A chronic late-payer may require different handling than someone who has
slipped up on a single occasion.

9.2.3 Improving Accounts Payable

It is to your advantage to keep cash in hand for as long as possible, which means carefully
monitoring your outflows.

Caselet Chester Carlson

he inventor of Xerography, he was born in to an ordinary family, his father was an
itinerant barber, he had a difficult childhood, he lost his mother and his father was
Tcrippled with arthritis at the tender age of seventeen. But he worked and completed
his studies in these adverse circumstances got a job for himself and also realized that he
needed to do something bigger for the betterment of the society.
Carlson was also looking for opportunities to do something good for self as well. While
in his job he noted that there were very limited and slow means and methods to make
copies of the documents. He worked late in laboratories, invented xerography and got it
patented. But he did not have enough money to make a product that could make a number
of copies at the touch of a button. To his despair and hard luck, no one wanted to experiment
with this new product. In fact, he approached IBM to get his project funded. IBM hired a
consultant who took 18 months to conduct a market research and indicated that there was
no market for a plain paper copier; on the basis of this report IBM declined Carlson’s
proposal.
He struggled hard from 1936 to 1944 but was not able to find anyone (at times he lost hope
but still believed in the success of his product) who could fund the project. Then in 1944, a
small company Haloid made an agreement in which Haloid got the right to develop the
Xerographic machine. The invention finally got its shape in 1959 when the xerographic
machine was introduced (21 years after its invention). The product was a major hit, the
company made billions and in fact this new machine created an entirely new generation
of copying, documenting, sharing printed text! Thanks to Carlson for inventing and thanks
to Haloid, who believed in the success of the invention, the lack of which could have
meant the burial of an idea of a genius, that has changed the world.

Source: Lall Madhurima and Sahai Shikha (2008), Entrepreneurship, Excel Books Pvt. Ltd.
Manage your due dates: Pay an invoice on the day it is due to keep consistent cash flow. Paying
early can leave you short of cash at a crucial time. You can organize your outflows by arranging
electronic funds transfers with your financial software.
Extend your payment times: Speak with your vendors and see if you can work out an agreement
so that payments are spread out and payment times are extended as long as possible.
Also consider ways of strengthening your relationships with vendors in case you need to delay
payment in the future. Remember that those who offer the lowest prices may not necessarily be
the most flexible – take this into consideration when choosing who to work with.

9.2.4 Improving Inventory Management

Inventory management basically involves monitoring your daily sales activity and making
sure your on-hand inventory reflects these patterns. You can use your retail management software

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