A Publisher’s Cash Management Plan:
Part 3–Bridging the Cash Gap with Asset-Based Lending

December 2002
by Dan Siburg & Howard Fisher

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Asset-based borrowing for any company is a blessing and a loss of control at the same time. This article will discuss the key points you need to understand about asset-based lending. First, however, some background.


Book Trade Tradeoffs

Traditionally the publishing industry has been a slow-pay, low-margin business complicated by seasonality and returnability. This is a model for a challenging cash flow.

To be successful, a publisher must recognize these facts and make every effort to counterbalance book trade sales by selling into other channels that have faster payments, no returns, higher margins, and/or higher prices.

Nevertheless, a new season’s titles sell rather easily in the book trade. Buyers place orders in advance of publication and the established patterns of buying at wholesale and retail take our product into the market quickly. When we use a distributor or independent sales reps, it’s easier and faster to sell into the book trade than into some of the other types of markets mentioned above that require a finished product before making a buying decision.


The Cash Predicament

Let’s create an example. Imagine that you’re a new trade book publisher (or maybe you really are). You start with cash and ideas. Over a year or two, in the process of producing new titles and making sales, you will gradually convert all of your cash into accounts receivable, inventory, and pre…IBPA Members – Click here to view the full article (login required).

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