There exists a saying among credit professionals; it is only a sale once the money is usually collected, until then it’s a present and we’re not in the gift giving business.
If you are a small business and therefore are not collecting from your customers in the timely manor you need to re-evaluate your own credit/collection practices. Many small business owners are experts in their field but may not feel comfortable about contacting their clients 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 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. It is much better to become proactive than reactive; when it comes to your money flow for your business.
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When you are positive you are calling the customers and uncovering 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 perform is bring in more cash for your business; much quicker than if you sitting 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 most 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 times 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 upon past due invoices.
9) Keep Good notes; document everything.
10) Efficient follow up is a key success factor! Use Outlook to schedule follow up calls or a check promise. (Follow upward 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 deliver a fax or email using the past due invoice. This will keep your title in front of the customer and increase your likelihood of being paid.
12) Return phone calls promptly, delaying means less money for you personally.
Implement these steps on a regular basis and you will discover an improvement in your cash flow.
For the small business owner who does not want to be bothered phoning customers or cannot afford the expenditure (salary and benefits) of hiring an employee to do this job. You are confronted with a couple of options; keep ignoring the problem 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 need 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 your organization.