The "heart" of your collections system should be to actively communicate and partner with customers that have gone beyond the agreed payment terms. Here are a few items to consider for your collections system:
You can have the best product or services in the world and still not run a successful business. Understanding the flow of money in your business is critical to your success. As a business owner you need to be looking at cash flow, revenue, profits, and other important financial metrics. Below are a collection of business articles on small business financials from our weekly Business Owner Insights.
Quote: "A little thought and a little kindness are often worth more than a great deal of money." - John Ruskin
Question: How might a little thought and a little kindness help you to develop a collections system that is based on building the customer experience, not damaging it?
Last week we began a series on collections, a vital part of your customer service. This is often a overlooked process for keeping and building customer relationships.
You may be thinking: "What?! Collections are vital to keeping and building customer relationships? Are you crazy? The reason I have to "collect" from them is because they have not paid me when they were supposed to --- why would I want to keep and build that relationship?!" Simply put, you want to build these relationships, because they have already done business with you and because they do owe you money.
It has been said that a sale is not truly a sale until you have collected the money. With this "truth" as a basis, your collection system is one of the most important systems your business needs to have and use.
Cash flow in your business is vital to your success. If you operate your payment terms as cash at the time of service, collecting money may not be much of an issue for your business. If your business, like many in today's business world, extends credit to those that use their goods and/or services, collecting money may be more of an issue.
As a business owner, you have not just the holidays looming, but the oh so fun tax season. There's a lot to prepare if you're not already organized: expenses, donations, profit and loss statements, etc.. We've complied a short list of apps that are designed not just for taxes (though you'll be wishing you've used them all year), but for accounting in general. Remember, if these apps are not right for you take some time to search the Play store or Itunes for the right app.
Some think that there is a clear analogy to money and time. We invest our money, we invest our time; we save our money, we save our time; we spend our money, we spend our time; we make more money, we make more.... This is where the analogy breaks down. Yes, there is something to be said about the investing, saving, and spending of both money and time, but you cannot make more time so you are left with two choices: Make it count the first time, or let time just slip away. Time is relentless and continues to tick by no matter what you do to slow it or stop it. This is why what Golda Meir once said is so important, "I must govern the clock, not be governed by it."
This past month we have focused on Time Bandits. Three common Bandits identified that will govern how we spend our time when we choose to not govern them were; e-mail, over committing, and employee interruptions. The proven system of "How to Implement Do Not Disturb Time" was made available as a tool that will help you to govern the clock rather than be governed by it. Take the system, implement it, use it, and watch your time become your own to do with as you choose.
When was the last time you took a good, long look at your financial reports? Do you remember what your income statement looks like? What does a balance sheet have to do with the day to day operations of your business? What types of investing in the company infrastructure do you need to do before the end of the year? These are some of the questions business owners have to ask themselves as they take stock of their current financial situation and plan for the push to the end of the year. Now is the time to take a look at what your support system looks like and what resources you have at your disposal to insure your finances are as strong as possible.
A proper Income Statement shows those disbursements that are generally deductible expenses for income tax purposes, but does not show certain types of disbursements, such as principal payments on loans, or the cost of acquiring a major piece of equipment. The Balance Sheet gives you a snapshot of the business' worth, based on what are called "Generally Accepted Accounting Principles", but there is a lot that a Balance Sheet does not tell you about the true condition of your business. In short, Balance Sheets and Income Statements are exactly what your accountant wants and needs to see in order to properly prepare the business' tax returns, but they don't tell you all of the story you need to know in order to run the business on a day-to-day basis.