There is a saying among credit professionals; it is only a sale once the money is collected, until then it's a gift and we're not in the gift giving business.
If you are a small business and are not collecting from your customers in a timely manor you need to re-evaluate your credit/collection practices.
Many small business owners are experts in their field but may not feel comfortable about contacting their customers for money that is due.
There is also the misunderstanding that a credit /collection professional will stunt company growth by denying sales.
Some fear they will lose customers by having someone call on 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 be proactive than reactive; when it comes to your cash flow for your business.
When you are proactive you are calling the customers and uncovering problems early on in the collection process.
This gives you time to make the necessary 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 in their payment.
12 Steps To Improving Your Cash Flow 1) Always be professional.
2) Utilize a customer service approach, be a problem solver.
3) Run an aging of all customers each month.
4) Be prepared; review the customers' file before calling them.
5) Know what leverage you have available (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 Payable personnel.
8) Don't be afraid to ask for the A/P Mgr or Controller to get answers on past due invoices.
9) Keep Good notes; document everything.
10) Effective follow up is a key success factor! Use Outlook to schedule follow up calls or a check promise.
(Follow up calls should be scheduled based on the information you have been told.
If you leave a message; call back in a couple of days.
) 11) When you do leave a message; also send a fax or email with the past due invoice.
This will keep your name in front of the customer and increase your chances of being paid.
12) Return calls promptly, delaying means less money for you.
Implement these steps on a regular basis and you will see an improvement in your cash flow.
For the small business owner who does not want to be bothered calling customers or cannot afford the expense (salary and benefits) of hiring an employee to do this job.
You are faced with a couple of options; keep ignoring the problem and continue struggling with slow cash flow or outsource your credit and collection function to a professional credit consultant.
Fact: Cash flow is the heart of your business; without it your business will soon come to an end.
If you are a small business and are not collecting from your customers in a timely manor; you need to re-evaluate your credit/collection practices.
In order to improve your cash flow you must have consistent and effective collection practices in place for your organization.
A credit professional can improve your cash flow, reduce your risk and find new ways to increase your sales.