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These days, one of the biggest complaints I hear from Small Business Owners is..."I'm struggling with cash flow".
And, with the economy making a recovery (albeit slowly)...cash is king. Businesses that dig deep and implement strategic marketing purchases NOW, will be better positioned for long-term success than their competitors.
It's a simple fact: More spending on marketing when others cut back means YOUR MESSAGE stands out.
So--IT'S IMPERATIVE YOU FIND THE CASH YOU NEED TO INVEST IN MARKETING.
One way you can do this is to take a closer look at your account receivables.
What is your total A/R? How many of your customers are s-l-o-w-p-a-y-i-n-g? Have you had to write some of these collections off? Do you have a system for following up on unpaid invoices? Does follow-up eat up your precious time...time you could spend on income-generating activities?
Expert Business Debt Collector, Wayne Eddington, advises:
"Many businesses face A/R problems--either how to deal with customers who pay their bills late, or not at all. While customers expect prompt and professional service, they don’t always meet the same standard when it comes to paying their bills."
Further, "Accounts not paid within terms can severely impact the cash flow of a business. A clearly defined and carefully communicated, yet diplomatic payment policy, may help avoid difficult collection situations."
Here are a few of Wayne's tips:
- Have a defined credit policy- The first step is to clearly define when accounts are to be paid. Make sure that your business’s terms of payment are clearly stated in writing to each customer.
- Require completion of a comprehensive credit application; possibly require submission of a nominal payment (to verify bank information).
- Obtain personal guarantees (especially on new businesses).
- Remember: After 6 months...you've created a collection issue and you will have to pay a percentage of what is collected. So, consider a flat rate company and get them involved at the 60 - 90 day mark. Your bottom line will improve!
Wayne's right. In fact, in most cases, your customers do have good intentions. Sometimes they just need a reminder to move your invoice closer to the top of their "to-pay" pile.
And, it's much easier to create a process for collecting late or slow payments while you're still in the "honeymoon" phase. Translation: Don't wait until your A/R gets out of hand. Your business needs the CASH FLOW now.
For more information and advice, Wayne Eddington can be reached at (818) 883-3324 or www.collections4less.com.
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