There is a saying among credit professionals; it really is only a sale once the money will be 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 expert will stunt company growth simply by denying sales. Some fear they will lose customers by having someone contact invoices that are past due. Both are usually completely false; in fact a credit score professional can actually help to increase sales for the business and improve customer retention.
The collection process needs to be a regular systematic approach.
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It is much better to be proactive than reactive; when it comes to your cash 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 along with additional documentation.
What this will do is bring in more cash for the business; much quicker than if you sat around waiting for the customer to send in their payment.
12 Steps To Improving Your Income
1) Always be professional.
2) Start using a customer service approach, be a problem solver.
3) Run an aging of all customers each month.
4) Be prepared; evaluation 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 associated with Accounts
8) Do not afraid to ask for the A/P Mgr or Controller to get answers upon past due invoices.
9) Keep Good notes; document everything.
10) Effective follow up is a key success aspect! Use Outlook to schedule follow up calls or a check promise. (Follow upward calls should be scheduled based on the details 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 all the past due invoice. This will keep your name in front of the customer and increase your chances of being paid.
12) Return phone calls promptly, delaying means less money to suit your needs.
Implement these steps on a regular basis and you will see an improvement in your cash flow.
For the small company owner who does not want to be bothered calling customers or cannot afford the cost (salary and benefits) of hiring an employee to do this job. You are faced with a couple of options; keep ignoring the issue and continue struggling with slow income or outsource your credit plus collection function to a professional credit consultant.
Fact: Cash flow is the center of your business; without it your company will soon come to an end.
If you are a small business and are not collecting from the customers in a timely manor; you should re-evaluate your credit/collection practices. In order to improve your cash flow you must have consistent plus effective collection practices in place for the organization.