There exists a saying among credit professionals; it is only a sale once the money will be collected, until then it’s a present and we’re not in the present giving business.
If you are a small business and are also not collecting from your customers inside a timely manor you need to re-evaluate your own credit/collection practices. Many small business owners are usually experts in their field but may not feel comfortable about contacting their clients for money that is due.
There is also the particular misunderstanding that a credit /collection professional will stunt company growth by denying sales. Some fear they will lose customers by having someone ask invoices that are past due. Both are completely false; in fact a credit professional can actually help to increase sales for your business and improve customer retention.
The collection process needs to be a consistent systematic approach. It is much better to become proactive than reactive; when it comes to your money flow for your business.
When you are positive you are calling the customers and unveiling problems early on in the collection process. This gives you time to make the essential corrections or supply the customer with additional documentation.
What this will do is bring in more cash for your business; much quicker than if you sat around waiting for the customer to send within their payment.
12 Steps To Improving Your Cash Flow
1) Always be professional.
2) Start using a customer service approach, be a problem solver.
3) Run an aging of most customers each month.
4) Be prepared; review the customers’ file before phoning them.
5) Know what leverage available for you (is an order ready to ship)
6) Call all customers (once the invoice is 5 days beyond terms).
7) Confirm contact names, numbers and email addresses of Accounts
8) Don’t be afraid to ask for the A/P Mgr or Controller to get answers on past due invoices.
9) Keep Great notes; document everything.
10) Efficient follow up is a key success element! Use Outlook to schedule follow up phone calls or a check promise. (Follow upward calls should be scheduled based on the info you have been told. If you leave a note; call back in a couple of days. )
11) When you do leave a message; also send out a fax or email with the past due invoice. This will keep your title in front of the customer and increase your chances of being paid.
12) Return calls promptly, delaying means less money to suit your needs.
Implement these steps on a regular basis and you will notice an improvement in your cash flow.
For the small business owner who does not want to be bothered phoning customers or cannot afford the cost (salary and benefits) of hiring an employee to do this job.
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You are confronted with a couple of options; keep ignoring the problem and continue struggling with slow cash flow or outsource your credit plus collection function to a professional credit score consultant.
Fact: Cash flow is the cardiovascular of your business; without it your business will soon come to an end.
In case you are a small business and are not collecting from the customers in a timely manor; you have to re-evaluate your credit/collection practices. To be able to improve your cash flow you must have consistent and effective collection practices in place for the organization.