There is a saying among credit professionals; it is only a sale once the money is definitely collected, until then it’s a present and we’re not in the present giving business.
If you are a small business and are also not collecting from your customers within a timely manor you need to re-evaluate your credit/collection practices. Many small business owners are usually experts in their field but may not feel comfortable about contacting their customers for money that is due.
There is also the particular 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 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 unveiling problems early on in the collection procedure. 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 sat around waiting for the customer to send within 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 phoning them.
5) Know what leverage available to you (is an order ready to ship)
6) Call all customers (once the invoice is 5 times beyond terms).
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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 phone calls or a check promise. (Follow up calls should be scheduled based on the info 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 out a fax or email using the past due invoice. This will keep your name in front of the customer and increase your likelihood of being paid.
12) Return calls promptly, delaying means less money to suit your needs.
Implement these steps on a regular basis and you will discover an improvement in your cash flow.
For the small company owner who does not want to be bothered calling 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 cash flow or outsource your credit and collection function to a professional credit score consultant.
Fact: Cash flow is the heart of your business; without it your company will soon come to an end.
If you are a small business and are not collecting out of your customers in a timely manor; you have 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.