5/4/18 Do you know what Other People’s Money means?
Yes, it’s a Danny DeVito’s movie, but it is also a financial concept.
Let’s find out a bit more:
Savvy businesspeople understand the importance of this concept. In simplest form, OPM suggests that you arrange to receive money due to you (i.e., receivables) at the earliest possible moment, and arrange to send money that you are obligated to pay (i.e. payables) at the last possible moment. In this way, you are able to enjoy the float or interest earned on this money. OPM policies are associated with improved cash flow as well as profitability.