Good news indeed • 4 June 2008 • The SnowBlog
Good news indeed
I've just received in a payment from our distributor for 18,000, when I was expecting anything from zero to, well, pick a number. Now that is most welcome (and a rather huge relief as I was starting to panic about July cash flow - hence the reminder about the cover design services we provide, below!) More windfalls like that, please, universe.
Does anyone else, by the way, have tremendous trouble forecasting how much cash is going to come into the business? It's weird because our US distributors forecast it to the cent, four months in advance, but in the UK I pretty much have to wait until I see what arrives in the bank. Even when we ask them to manually calculate a forecast, it always varies. Our distributor says it's for a number of reasons: one is that customers may pay late, or have invoice queries (and since our invoices are batched with other publishers, there can be a lot of these). There's also a reserve on our account which varies by thousands each month. Each month, the distributor has a shortfall of collections for reasons ranging from invoice queries to non-payments, and allocates that difference between what is owed and what is collected by looking at the returns profile for each publisher. So last month I had a reserve of more than 16,000; this month it's 10,000. It's a hell of a lot of money, that's owed to us, sitting in a place other than our bank account. Another reason for the discrepancy between forecast and payment is that we're invoiced in a month for the cost of distributing the sales of that month, but only receive the money a matter of months later since we provide credit payment terms, and as it's a percentage you don't know what you'll be invoiced until the sales are in.
It would save a lot of hyperventilating on my part if I could get cash receipt forecasts nailed down. Any tips?