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Feb 11, 2019 | IN Process Verification | BY Wayne Smith
How to Eliminate Cash Flow Problems in Your Business

Does your project load reflect a healthy business but your cash flow is telling a different story?

In the heyday of the wireless boom, 30-day payment terms were the norm. Net 30 meant that vendors could predict cash flow, hire new employees, and buy new equipment. It provided security, and in that security, quality and teams improved.

All of that started to change when in the late 1990s, carriers went into the business of acquisition. In the second largest merger in corporate history, Bell Atlantic merged with NYNEX and spun off Bell Atlantic Mobile (now Verizon) in 1997.

In 1998, Southwestern Bell re-branded as SBC Communications and began the process of acquiring McCaw Cellular, Comcast Cellular, Vanguard Communications, Lin Broadcasting, SNET and 50% of Ameritech, making SBC the nation’s largest wireless services provider. By 1999, the deal was final, and AT&T completed its merger with TCI and reentered the consumer market.

To stay competitive, carriers were forced to leverage debt to come up with the extreme amounts of capital needed for these acquisitions. As a result, payment terms with vendors stretched, first to 60 days and then to 90 days. At the same time, the data verification burden was growing – which not only made more work the vendors but also gave carriers a way to stretch out payment terms even longer.

Poll

 

Never take your eyes off the cash flow because it is the lifeblood of the business."  – Richard Branson 

How Long Are You Waiting to Get Paid?

In the current landscape, vendors routinely wait five months to receive payment. Instead of relying on the business’ cash flow to support growth, companies are forced to look to conventional loans – which only increases the debt burden.

Project Cycle (long)

Revenue is vanity, profit is sanity, but cash is king. – Alan Mitz 

Break the Low Cash Flow Cycle

The key to breaking out of this low cash flow cycle is to get an accurate closeout package into the hands of the carrier as soon as the project completes – or even a little before. The clock on the 90-day payment cycle begins when the closeout package is received, so sending an accurate closeout package as quickly as possible is essential to getting paid sooner.

Project Cycle (short)

Active Oversight captures the data required for the closeout package in real-time, as the work is completed. At the end of the project, or even a few days earlier, you have a completed closeout package that is ready to go to the billing department.

The wireless telecom vendor ecosystem needs a reliable way to create accurate closeout packages quickly and increase consistent cash flow. Without it, the industry will not have the resources required to support 5G network growth. Active Oversight gives both carriers and vendors a cost-effective, intuitive tool for streamlining data collection and submittal.

 

Tags: Process Verification

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