[apatters]

I think the most important lesson here is that you need to have really good accounts receivable to survive in business. In a small business AR is a founder/owner-level concern. You should spend some portion of your time personally making sure you get paid--on time!

If you manage your receivables actively then you become aware very quickly if someone doesn't pay on time. This flushes out fraudsters, keeps you directly connected to your cashflow situation, and gives you early warning signs of any possible financial problems. These are the ways that actively managing AR mitigates risk.

It also carries a lot of upside. People who pay you regularly are some of the best people you can partner with. When someone's paid you on time for years it's a very big sign that they can be trusted (and have money!). And when you're directly involved in collecting money from those people you inevitably end up having discussions with them that are very frank and carry real stakes. If these discussions are successful that is another sign they could make a good partner.

If one of the founders at Reframed had stayed directly involved with AR on some level this story would have had a much better outcome. Simon would not have been a vendor for long. They would have found a new vendor and learned through direct experience whether that vendor could be a good partner/investor or not.

The other acronym I never let go of is HR. If I remember correctly Bill Gates was personally involved in Microsoft's first 500 hires!

[greghendershott]

Exactly. I actually used Quicken in my startup's early days. Naively. And fortuitously. Even after we switched to real accounting software, I would focus first and mostly on the cash flow statement and similar metrics.

Many things might someday be cash -- an invoiced sale, an A/R balance, an investment term sheet. Or they might not. Meanwhile they're only promises or futures -- worth nothing if the company abends due to a SIGKILL. A small business is very much an exercise in blocking I/O. :)