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you pay your suppliers.This is illustrated below:
 
you pay your suppliers.This is illustrated below:
   −
[[Image:http://fileserver4.jpghosting.com/images/tn_cash_gap_b7c1f8e3d90ab00b5d5dbd9203367d05.png]]
+
http://fileserver4.jpghosting.com/images/cash_gap_b7c1f8e3d90ab00b5d5dbd9203367d05.png
    
  Note that if you are in the service industry, suppliers become wages and
 
  Note that if you are in the service industry, suppliers become wages and
    
Based on the example above, suppliers are paid 30 days after the goods are acquired, the customer is invoiced in 60 days and they then pay their account in 45 days. This would represent a cash gap of 75 days, being the difference between when the customer pays and when you pay the supplier.
 
Based on the example above, suppliers are paid 30 days after the goods are acquired, the customer is invoiced in 60 days and they then pay their account in 45 days. This would represent a cash gap of 75 days, being the difference between when the customer pays and when you pay the supplier.
−
To reduce your cash gap and thus improve your cashflow, you can consider the following:
+
 
 +
To reduce your cash gap and thus improve your cashflow, you have to think about:
 +
 
 
#Defer paying suppliers until the due date or re-negotiate supplier terms.
 
#Defer paying suppliers until the due date or re-negotiate supplier terms.
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