For many small business owners, cash flow is always an issue. Which is, there is often not a large deposit of money sitting around to fund this month’s rent, payroll and expenses. Instead, many small businesses are operate more on a month-to-month basis; payments from clients and customers are expected in a short period of time to keep the business enterprise afloat. This guide will help small business owners maintain the cash flowing.
The most important thing a small business owner can do is to ensure that the client or even customer’s bill is not in dispute in any way. If there is any doubt about the legitimacy of the bill, these uncertainties will be used as a reason to not make prompt payment. Thus, if your business provides a product to the customer, ensure that you have the customer sign a receipt for the product stating that he has received the product and agrees to pay for the invoice in a specified amount of time. Then provide a copy of this towards the buyer. For a more service-related company, having the client sign off on estimates and acknowledging receipt from the service is essential.
Another key will be avoiding the problem of past due amounts is to offer the buyer a reason to pay for quickly. A simple way to do this is to require payment upon delivery. Providing a way for immediate credit card payment is a great way to get your money quickly. Another way would be to offer a discount for early payment; for example , a 2% discount with regard to payment within 15 days. Ensure it is easy to pay and pay rapidly, and you will avoid a lot of hassles down the road. Another incentive to pay on time is the use of late fees.
As soon as an account has become delinquent, even just a day time, make contact with the customer or business. Deliver another invoice, but this time print out it on yellow or pink paper. Enclose a friendly and expert note stating that the account is usually past due. Avoid harsh or demeaning language so as to not give the account an additional reason not to pay. If you have a late fee policy that was clearly mentioned on the original invoice or contract, add the late fee to the invoice and do not feel bad about doing so.
After a week or so, if transaction has not been received, follow up with a telephone call. Again, avoid being demanding or belligerent; your goal is to gather your money and not to punish or even make the customer or client really feel bad. Chances are, the client or consumer is well aware of the past because of amount, and he is not paying for grounds.
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At this point, it’s important to figure out why.
If the overdue amount is from a business also it looks like it is struggling to survive, there are many things you can do. One strategy is to consider an secure partial payment instantly. This could be money or products or services through delinquent account. Something is always much better than nothing, and if you’re concerned about the particular viability of the account, it can be a time and stress saver to just accept plus loss and move on. While you can threaten a small claims court legal action or referring the account in order to collections, the reality is that collecting from a business or individual deeply in debt and going bankrupt is often a lot more trouble than it is worth, particularly if the amount is relatively small.
If the company is doing OK and is just having it’s own cash flow problems, workout a payment plan immediately. Obtain a partial payment, even if it is just 10-20%, as a way to set the course for your customer or client to get on the path to full payment. If possible, secure post-dated checks for the remainder, even if they are spread out over several months. Be assertive, but , again, not harsh or demanding, as you might want to do business with this account again. That said, remember that the squeaky wheel is usually oiled initial, so it’s OK to be persistent.