Cash Flow : 50 days to pay your credit card debt

In running a business, the most important keyword is "cash flow". A business without healthy cash flow, is just like a person lacking of oxygen and unable to grow and move forward.

When I started out my online business with limited cash. I have to manage my spending carefully in order to maintain sufficient cash in the bank account for rainy days. One of the lessons that I've learned so far is that I can use my credit card to pay for Google Adwords credits and pay the banks 50 days later. The advertisement will bring in the sales and I get to pay later and not immediately. This is a form of leverage that allow me to control my company finances and will be very useful in cash flow projection.

What!? How to pay 50 days later?

Yes, you can choose to pay your big spending amount 50 days later with little financial knowledge about how credit cards billing cycle works.

There are two important dates printed in your credit card statement that you get every month. The first one is the "Statement Date" and next is "Due Date". For most people, we just don't know how to read numbers and dates in school. Most of our school teachers don't know this either, so how could they teach us then?

To make it simple to understand.

Statement Date - Is the date when the banks print your credit card statement and send out the statement/bill to you.

Due Date - Is the date when the banks expect you to pay up before imposing interest.

A credit card statement example

Taking the above credit card statement example, the number of days from Statement Date to Due Date is 20 days. (from 9 Oct to 29 Oct)

Ok, we figure out how to see the 20 days... how about the 30 days??

The 30 days are harder to see.. but they are there... you just have to look carefully.

From 9th October to 9th November is roughly about 30 days. Can you see it? Still following me? October to November is roughly 30 days.

Therefore, 30 + 20 days = 50 days.

If I were to make payment for Google Adwords or purchase some services or stock up to assist in my business. I would like to drag as long as possible to pay my creditors.

So I choose to top up my advertisement credits on the 10th October. 30 days later the banks will print out the statement and I still get 20 days to pay the banks.

Confusing? Nevermind, this is because we don't learn financial education in school.

To make thing simple. The rule of thumb is ... spend 1 day after your statement day and you will have 50 days to pay later.

What I did is to write the statement date on my own credit card as a way to remember the statement date. Hope you find this little financial hack useful in managing your business cash flow.

By Adam Ng

IF you gain some knowledge or the information here solved your programming problem. Please consider donating to the less fortunate or some charities that you like. Apart from donation, planting trees, volunteering or reducing your carbon footprint will be great too.