Tag Archives: credit

Business Plan

At Upstarta meetings we’ve explored the concept of business plans.

In a “traditional” business, you need a business plan because a bank will require you to present one. Since an Upstarta doesn’t go to the bank for a loan or credit, we can re-assess what a business plan should look like to work for us, or even whether to have one at all.

What we concluded is that it’s useful to define your general direction, but the level of detail that a bank would require in certain aspects is not something you need to waste time on. You need to, as always, consider the possible¬†consequences¬†of decisions and structures you set up.

We also know that markets tend to find products, so an early plan (before entering the market) to market/sell a particular product will quickly be obsolete or look like total nonsense. So you plan to explore in a low-cost manner, maintaining flexibility. Make failing steps cheap and fast, to focus on avenues that are promising/viable.

Do you have examples of this from your own experience? We’d like to hear!

Remission Advice

Australian companies have this strange habit, they issue “remission advice” notifications when they’ve paid an invoice.

I suppose the practise comes from back when a cheque would be in the mail for at least a few days before arriving, and after that, paper bank statements issued once a week. But does it make sense today? I don’t think so, and here is why:

  1. credit card and some Paypal payments are instant.
  2. bank transfers only take 1-2 days.
  3. any self-respecting business has electronic banking and will view it almost daily.
  4. cheques are sometimes still issued by companies, but from my experience it’s mainly abusively for cash flow reasons.
  5. similarly, companies issue remission advice to say they’ve paid, and then it still takes over a week to see anything show up. This is because the advice notice is often created by their own accounting system. Essentially it’s as a good as “made up”. There again it’s just a cash-flow trick.

You know what’s unequivocal proof of payment? The recipient actually seeing the money in their online banking. It’s the only proof any of my businesses accept, and that’s explicitly stated policy.

Some clients still send remission advice notices. It can be entertaining to see the discrepancy between notices and the actual arrival date of the money. Basically the accounts payable people of those businesses go out of their way to prove that they’re lying. I don’t understand why they would bother doing a silly thing like that, but perhaps they deal with more gillible accounts-receivable departments, and hey it’s accepted practise!

How do you handle accounts receivable?