Small Business Cash Flow » get paid

Selling On Credit Is Risky Business

Denise O'Berry — Mon, 22 Mar 2010 01:42:01 +0000

How many times have you heard me say your small business is not a bank? Plenty I’m sure.

And although I encourage you not to sell to your customers on credit, I’m a realist and do understand it’s a must for many small business owners.

So I tapped into Ted Shalek, CFO of Smart Online, a company that specializes in technology based solutions for small business owners, who believes that the risks associated with selling on credit can be greatly reduced if the proper steps are followed.

“Since we do not all have the luxury of knowing and trusting each customer, we must take precautions to protect the cash flow of our small business,” said Shalek, an authority on small business. “If you do not know the customer, make sure that you obtain solid and confirmable information about the prospective customer by identifying their name, address, phone number, email address and business/credit references, credit card numbers if appropriate.”

Here are a few simple steps he recommends you take to significantly decrease the likelihood of future collections nightmares

>> Reminder Notice: Send out 7 days before the original, agreed upon payment date, if you have not received payment.

>> Read Receipts: In the email, let your customer know that you had an agreement, you provided the service or product on a timely basis and it is customer’s obligation to provide you with payment.

>> Stay Professional: Place a professional call to the buyer and/or the point person at your customer’s office. During the call, be firm and remember to state the facts and identify specific payment terms and times.

>> Appointments: If the amount owed is significant, make an appointment with the buyer to come by and collect the funds, and if they say the funds are not immediately available, keep the appointment and discuss specific payment terms and times.

>> Dramatic Impact: If the customer/buyer refuses to accept your calls and does not reply to emails requesting an appointment, stop by the customer’s office unexpectedly and tell them that you are prepared to wait on their premises until you receive payment or have a meeting with the owner, buyer or financial officer.

>> Collection Agency: Unfortunately, if the customer does not provide any positive feedback and refuses to acknowledge your communication, contact a reputable collection agency that will represent your company in a professional manner (remember that the collection company will retain a portion of the funds that collected from the customer).

Take care when selling on credit — and don’t forget you are not a bank. If it truly is necessary for your small business to grow, make sure you use proper care so you don’t set yourself up with collection problems down the road.

What do you think?

Three More Things You Can Do Right Now To Pump Up Your Cash Flow

Denise O'Berry — Fri, 18 Sep 2009 13:52:04 +0000

I recently talked about three things you could do right now to help your cash flow. I hope your were able to implement those three things in your business. And with that in mind, here are three more. These are a bit more long term, but will help your cash flow if you can implement them in your business.

Package your products or services to deliver on a regular basis and take advantage of recurring billing. You could set up a product or service of the month club or an exclusive membership that your customers can subscribe to and pay you every single month.
Partner up with a complementary business and have them sell your products or services as a value-added benefit. The two of you can brainstorm to find where you can get the most bang for your buck and then split the proceeds.
Stay on top of outstanding invoices. Everyone wants to save money. Offer a small discount — two to five percent — to your customers for paying within fifteen days rather than waiting the usual thirty. Monitor and act quickly on any invoices that cross the thirty day threshold with no payment.

More ideas? Please leave a comment.

Improving Your Cash Flow by Getting Paid Faster

Denise O'Berry — Sat, 18 Jul 2009 14:04:42 +0000

This guest post is from Martin Povey and is a good tip for Canadian companies.

For Canadian small business owners there’s a surefire way to improve your cash flow, reduce your outstanding receivables save trees and mailing costs and overcome the “cheque is in the mail” syndrome.

It’s called the e-mail money transfer. This method of payment is reliable, inexpensive and once you’ve trained your customers to use it, it’s an incredibly effective way to get your invoices paid fast.

If you do your banking on-line it’s available through all the major banks in Canada and some credit unions. This method of payment is not available internationally. If you don’t do your banking on-line then set it up – now! It will be well worth the time for you to do so.

Briefly, here’s how it works. You e-mail your invoice to your customer in whichever format you prefer (PDF, Word etc). Your customer receives it, goes to their on-line banking portal and creates an Interac money transfer for the amount of the invoice and e-mails the funds to your e-mail address. No money actually gets e-mailed, this step is more of a notification that funds are pending deposit into your account.

Usually, you receive the notification within 30 minutes or so of it being sent. You simply click on a link within the e-mail and then click on the logo of the financial institution and account that you want the funds deposited to and the money is now in your account.

Wouldn’t it be an ideal world if you could collect all your receivables this way? The reality of course is that this is unlikely to happen any time soon but if just half your customers paid you this way, then imagine the improvement in your cash flow!

A word of advice, if you have kids living away from home don’t let them know that you know how to e-mail money, otherwise you have no excuse when you get the “I need money” call. Be smart of work. Act dumb at home!

Martin Povey owns buildingyourbusiness.ca and is a business and marketing coach who helps entrepreneurs and small businesses who need focus direction and creative solutions to build their business and achieve their goals. He can be contacted at martin@buildingyourbusiness.ca or 403-529-9259 or visit www.buildingyourbusiness.ca/ Article Source: Ezine Articles