There exists a saying among credit professionals; it is only a sale once the money will be collected, until then it’s a present and we’re not in the gift giving business.
If you are a small business and they are not collecting from your customers within a timely manor you need to re-evaluate your own credit/collection practices. Many small business owners are usually experts in their field but might not feel comfortable about contacting their clients for money that is due.
There is also the particular misunderstanding that a credit /collection professional will stunt company growth simply by denying sales. Some fear they are going to lose customers by having someone call on invoices that are past due.
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Both are usually completely false; in fact a credit score professional can actually help to increase sales for the business and improve customer preservation.
The collection process needs to be a regular systematic approach. It is much better to be proactive than reactive; when it comes to your cash flow for your business.
When you are positive you are calling the customers and unveiling 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 do 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) Start using a customer service approach, be a problem solver.
3) Run an aging of all customers each month.
4) Be prepared; evaluation the customers’ file before phoning 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 associated with Accounts
8) Do not afraid to ask for the A/P Mgr or Controller to get answers upon past due invoices.
9) Keep Good notes; document everything.
10) Effective follow up is a key success element! Use Outlook to schedule follow up calls or a check promise. (Follow up calls should be scheduled based on the info you have been told. If you leave a note; call back in a couple of days. )
11) When you do leave a message; also deliver a fax or email with all the past due invoice. This will keep your name in front of the customer and increase your chances 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 find an improvement in your cash flow.
For the small business owner who does not want to be bothered contacting customers or cannot afford the expense (salary and benefits) of hiring an employee to do this job. You are confronted with a couple of options; keep ignoring the issue 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 business will soon come to an end.
If you are a small business and are not collecting from your customers in a timely manor; you should re-evaluate your credit/collection practices. To be able to improve your cash flow you must have consistent plus effective collection practices in place for the organization.