Tag Archive for "accounts receivable"
The July issue of Entrepreneur included a helpful article addressing how to get paid. Timely payment or payment at all is an ongoing problem for many small business owners and likely to continue for the foreseeable future.
The article discusses the various scenarios we’ve all probably heard and how to counter them to collect what is due you. For instance:
- A customer now wants to pay in installments, the author recommends the first installment be due right now.
- A customer claims personal matters are preventing payment from occurring. Remind the customer that creating credit issues will only compound the personal problems.
- A customer is a friend who is using the relationship to extend the payment time. Remind this friend of the perils of impairing his credit rating and what can’t happen with future rush orders.
The article also discusses how your business systems maybe setting you up to be paid late.
I recommend reading the article even if you’re fortunate and have no late paying customers. You just never know…
If you’re looking at your aged accounts receivables in one hand while holding a stack of invoices that are returned mail in the other there may be hope. There is service called “skip tracer”. All Business tells us that for $50 you run a skip trace on the non-paying client who has “skipped town” to collect what’s owed to you. You can find it under skip tracing or private investigations in the Yellow Pages or on-line.
Also from All Business, Sam Thacker, the business finance guy did a great post on cash flow forecasting. If you aren’t doing it you need to be and he offers a free downloadable excel worksheet to help you.
Making sure your customers pay you is paramount in today’s economy. The key is to stay on top of your collections so none of the risks occur and you don’t spend valuable time implementing remedies.
The inherent risks in not staying on top of aging accounts receivable include:
- Loss of cash you were counting on to pay your vendors & employees.
- In the event of the bankruptcy of your customer, being an unsecured creditor.
- Loss of the product you shipped in the event it is seized by the customer’s secured creditors.
- In the case of a service business, where a retainer or deposit was not collected, it’s the hours already worked.
The warning signs a customer is in financial distress: Continue Reading “Risks & Remedies with Slow Paying Customers” »
