How To Pay Your Vendors When You Are Out of Money

Updated: Jul 9

As an entrepreneur, there will probably come a time that you will run into this problem. Unfortunately, it’s part of learning to grow a business and managing your finances.


But what do you do when you are out of money and have vendors to pay?


How do I manage my operating expense account?


Most of my clients pay all of their vendors on the same day each month but do their allocations twice a month to their operating account.


Let’s say you pay your vendors on the 10th of each month. Throughout the month, you’ll want to make sure you allocate money to your operating expense account each time you receive new money. Those funds will remain in the operating account until you are ready to pay bills on the 10th.


When you have a schedule and system, then your bills are always paid on time each month.


What if I don’t have enough money to pay expenses?


This question is really the moment of reckoning! What happens if you don’t have enough money in your operating account to pay your expenses? It’s a harsh realization when you don’t have enough money to pay the bills.


With Profit First, you have multiple accounts such as operating expenses, tax, profit, and owners’ compensation. Do not pull money from your tax or profit account when you don’t have enough in your operating expenses account. Instead, you need to go through all of your costs and see what you can adjust or cut until you can afford it.


The next step is to prioritize the bills you have and find a way to pay what you owe when the next allocation comes in 2 weeks. It may be challenging, but you have to find a way to cut your expenses. There are no ifs, and’s, or buts about it. The Profit First system will shine a light on your operations.


When you don’t have the money to pay your bills, the answer is always your expenses. You must find a better or cheaper way to get the same results you’re getting with your current expenses. So either increase your income or trim the fat from your monthly overhead.

Do you need some help cutting your expenses? Let’s talk.




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