For a W-2 employee or a classic under the table cash guy nothing feels better than getting paid on Friday after work. But don't get me wrong 'cause that's not what I'm talkin' about. I'm talkin' about a business that delivers services on terms and then waits to get paid. Actually it's more like hopes to get paid. Businesses shell out cash delivering excellent service to customers and then find themselves in a cash flow squeeze play.
47 Days Later
Back in July 2016 we completed a bitcoin tax and accounting engagement for our client, Coin Rack, LLC, and we proceeded to bill for the remaining 50% per the agreement. Forty-seven long days ticked by working for our money a second time to collect the balance due. If you don't follow up, then another company will and it's all about competition for limited resources. After all customers would pay on time is they weren't having cash flow issues.
Insult to Injury
Working for your money twice is bad enough. Then having to wait another 8 days for the money to clear is insult to injury. So maybe the wait is 5 days instead of 8 but either way it feels practically the same in a world where 8 days or longer is still common place banking. It's a classic case of the Banking Burnout Bonanza™, a bonus of sorts for all your hard work.
The Law of Waiting to Get Paid:
Wait #1) Waiting for customers to pay (aka working for your money a second time)
Wait #2) Waiting for banks to release your money
Dinner and a Smile
On a recent Friday night, I was working away motivated by a 7pm departure time for peace of mind and dinner at a nice restaurant. At 6:40pm the owner of Coin Rack, LLC finally pinged me on IM with news of bitcoin in hand. He requested an invoice for payment so I jumped into action and sent a bitcoin invoice via Coinbase in 4 minutes and 48 seconds. He promptly paid in bitcoin in another 3 minutes and 56 seconds. The bitcoin was pending in my Coinbase wallet almost instantly and I left for dinner with a smile on my face.
Good food, conversation and beer made for an exceptional time but the true joy came from paying with fresh bitcoin we received a few hours prior. (Of course I had a business discussion about our bitcoin consulting business at dinner so it was a deductible meals and entertainment expense) The best way to understand bitcoin is to use bitcoin. Getting paid instantly is like a super power most easily understood by entrepreneurs who know the cash crunch feeling.
47 + 8 = 55
Normally after waiting 47 days for payment we'd have another 8-day headache from the Banking Burnout Bonanza™ totaling 55 days. Thanks to bitcoin we went from invoice to cash in hand in less than 16 minutes. This feels great because it's 720 times faster than banks in this example. There are many ways to get paid in less than 8 days but bankers should review an important principle:
You're only as fast as your slowest man.
Banking in no more reliable than the slowest form of payment.
Bitcoin eliminates Wait #2 of the Law of Waiting to Get Paid. Now all you have to do is eliminate Wait #1 and you'll never get caught in a cash flow squeeze play again. Your business policy has a lot to do with it however, bitcoin, our modern day financial super hero can cure this one too. That's a topic for another blog so until then get a copy of my book, The Ultimate Bitcoin Business Guide™ in paperback, eBook and audiobook.
The Bitcoin CPA™, Kirk Phillips