Slow Cash Flow?
Businesses need for cash flow and collections
, never changes.its always a little bit of Brain Damage.but, its YOUR life blood. We are always trying to scare up money for expansion and just paying our small business bills. Whether its times of economic downturn, as now, or time of boom, cash flow is always king typically slow. When things are bad, people slow pay you because no one is paying them. When things are good they are expanding and paying it forward with bills and expenses, consequently they are low on cash again/always, your pick. As a vendor, you flip and flop, ALL the time, between one and the other. Here are some tips to help with the process:
* Bill your clients consistently Pick the same time every month to send the client your invoices. They will get used to them coming in and can PLAN for their arrival. It can be a different time table for each type client.
* Consider asking them what time of the month is best FOR THEM Many of us plan our personal finances around the our big bills; such as, mortgage, car, insurance, etc. payments each month. You may pay the mortgage on the 1st and the car on the 15th to split of the bills and to coincide them with your paychecks, and to make it easier for you. You know how hard it would be to have all you personal bills do on the 1st of every month. Businesses are somewhat the same. When you send out invoices, you tend to receive checks. But, wouldnt you get more money, in a more timely manner, if you could tap in to when the client wants to pay you. And, you might get some value added cudos for even asking them I suspect no one else has. Most small business software can set a client up to receive invoices at 30-day intervals startingwhenever you decide.
* Call sooner rather than later Dont wait until a receivable is weeks or months past your agreed upon payment perimeters. Aging accounts only get harder to collectlike your thoughts. Relationships, business or personal, are about communication. A bill due to you one week after your agreed upon timetable is a good opportunity to check in with that client to see how they are doing, how your service to them is going, do they have any problems with your service, etc. Once they tell you how well things are going with you as their associate, it will hard for them to say, I cant pay you.once you mention ityoull probably get something. And, you find out how they feel, how you are perceived, etc.two good things, money and recognitionmake those calls today.
* Make sure you are talking to the right person Ask the person if they can authorize this bill to be paid. Dont waste time talking to your contact over and over expecting to go to the credit person for you it doesnt typically happen. You must be responsible for your own money. Its fun to get paid what you are owed.
* Negotiate Its conceivable that all your clients dont have all the money they need all the time.do you. So, make a deal set new terms during your call 50% now and 50% next month is better than no money until next month. And, if a client is having money problems80% cash now is better than 100% never, which = 0.
* Outsource your aging receivables There are companies, not collection agencies, who will make these calls, transparently, acting as YOUR credit department. If you cant bring yourself to do the steps mentioned above.hire someone to do it for you. These companies are skilled at negotiation, great at being nice (and keeping your clients), and they dont have a problem asking for money (i.e. being the bad guy). This is literally a unique skill and you can use it to your advantage for a cost of pennies per account each day, rather than a 20, 30, or 50% commission to a collection agency.
* Collection Agencies Use them only when an account is very old and you dont want to keep the client. They are difficult and typically rude. It works sometimes, but Id only use them when all the options mentioned above are exhausted. All that plus they get sued a lot, and that might not be fun for you either.
by: Lee Croucher
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