Get a grip on your money.
With our challenging financial environment, small business owners need to maximize their cash flow in order to remain in business and to grow.
Collecting accounts receivable is the number one tactic to improve your balance sheet. Here are some tips to help you remain on the plus side:
- Keep detailed records of the money due and the money owed. Collect what is owed to you as early as possible. It is essential to understand the aging of your accounts receivable. The longer an account goes unpaid, the more difficult it becomes to collect.
- Give your customers flexible payment options. For repeat customers, offer a reasonable discount for payment in full or early monthly remittance. Plus you will be building “good will.”
- To speed payment, research and understand the billing preferences and procedures of each customer – ask what time of the month is better to send an invoice. This is another “good will” builder.
- Make sure you understand the laws of your state when you begin to collect your delinquent accounts. Start with researching the Fair Debt Collection Practices Act (FDCPA).
- Bad credit can be contagious – don’t let a customer ruin your credit by paying late, thus impeding your cash flow. Stay on top of your accounts receivable every day – always find out how much cash you have. Remember that sometimes you may have to “fire” a customer. If they don’t pay, they are no good to you anyway – a sale does not matter if there is no cash.