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For most small business owners, cash flow is always an issue. That is, it is often not a big stash of cash sitting around to finance this month’s rent, payroll and expenses. Instead, many small businesses run more a month to month basis; payments from customers and clients need a short time to keep the business afloat. This guide will help small owners keep the money flowing.
The most important thing a small business owner can do is to ensure that the customer or the customer’s bill is not in dispute in any way. If there is any doubt about the legality of the bill, these doubts will be used as a reason to not make prompt payment. Thus, if your company offers products to customers, make sure that you have the customer sign the receipt for the product, stating that he had received and agreed to pay the bill for a certain time. Then provide a copy of this to the buyer. For more service-related business, have the customer sign off on the plans and acknowledge receipt of the service is necessary.
Another key is to avoid the problem of arrears amounts to offer the buyer a reason to pay quickly. A simple way to do this is to require payment on delivery. Providing a way for the next credit card is a great way to get your money quickly. Another way is to offer a discount for early payment; for example, 2% discount for payment within 15 days. Make it easy to pay and pay quickly and you will avoid a lot of hassle later. Another incentive to pay on time, the use of late fees.
Once your account has become delinquent, even just for one day, to contact customers or business. Send another account, but this time printed on yellow or pink paper. Follow a friendly and professional mind that it is in default. Avoid hard or demeaning language so as not to give an account for an additional reason to pay. If you have a late fee policy was clearly stated in the original invoice or contract, add a late fee to account and do not feel bad doing it.
After a week or so, if payment is not received, monitor the call. Again, avoid being demanding or belligerent; Your goal is to collect money and not to punish or make the customer or client feel bad. Chances are the customer or client is well aware of the past due amount, and he is not paying for a reason. At this point, it is important to figure out why.
If the default amount from the company and it looks like it is struggling to survive, there are several things you can do. One strategy is to test the secure part of the payment immediately. This could be money or goods or services from a delinquent account. Something is always better than nothing, and if you are concerned about the performance of the account, it can be time and stress saver just accept and losses and move on. Although you can threaten small claims court lawsuit or refer the account to collections, the reality is that to collect from the company or a person deeply in debt and going bankrupt is often more trouble than it’s worth it, especially if the amount is relatively small.
If a company is doing all right and just to have it in their own cash flow problems, work out a payment plan right away. Get partial payment, even if it is only 10-20%, as a way to set a course for clients or customers to get on the road to full payment. If possible, secure by dated checks for the rest, even if they are spread out in a few months. Be assertive, but, again, not harsh or challenging, as you might want to do business with this account again. That said, remember that the squeaky wheel is usually oiled first, so it’s OK to be persistent.
For many small business owners, museum is an onerous task. Making sure the account is indisputable, payment is easy to make and have a clear and consistent collection process, will go a long way to reduce the burden and stress.
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