EFFECTIVE STRATEGIES

Farley's company employs several other strategies to maximize its cash flow position:
· It starts calling accounts 30 days after invoicing if it has not received payment or had any correspondence with the customer. At 60 days it sends a letter of intent to lien, and at 90 days it files a lien. "But it rarely goes that far," Farley says. "Our process not only helps cash flow, it saves us administrative money. I use my legal counsel strictly for writing the letters and if we have to go to court, but the less I have to use that, the better for the company."

· It consistently cross-checks receipts of materials using its sophisticated computer system and contacts vendors immediately if there are discrepancies in pricing or what was shipped.

· It takes all discounts offered by vendors and pays invoices promptly, which Farley says also results in increased vendor responsiveness.

· When disputes arise, it continues to pay its bills while the issue is negotiated to increase its leverage and bargaining position.

· It pre-projects the margins it wants to achieve in each of its five business segments (lumber, doors, millwork, trusses, windows and insulation) and uses those numbers to guide its buying decisions. "One of my partners works with the buyers every day to get the best price, and that is critical," Farley says. "We hit that side of the business as hard as we work customers and contractors on the other end."