ugly stik

What a way to start the day. My son who just got his driving license knocks into not one, but two cars. Sheesh…

What do you do when your friend says “NO” to a proposed solution and provides no other alternative?

Frankly, that puts the friendship in a very awkward position.

Never be afraid to ask for help and don’t wait too long to call in the experts: A reputable debt collector can help you to collect your overdue accounts, leaving you to focus on other areas of your business. Don’t wait till your account is 120 days overdue to ask for help – the sooner you call the experts the sooner you get paid.

Businesses, particularly small and medium sized enterprises, need to understand that they deserve to be paid on time no matter who their customers are.

Start the collection process the day after the bill comes due: The longer a debt remains outstanding the less likely it is to ever be paid. If an account was to be paid in 30 days and is not, start chasing the bill on day 31. Cease the extension of credit on overdue accounts: Although it is tough to do, particularly if you deal with big business, you must stop extending credit to customers with overdue accounts.

Issuing a polite reminder as a bill approaches its due date is a smart business practice. Bills can get lost or over-looked; this reminder is a good way to ensure that your bill is front of mind. The pressure you apply should increase as the bill enters overdue territory.

Having a solid process in place to track accounts receivable is vital. This includes monitoring invoices as they head towards the end of the standard 30 day payment term. Keeping a close eye on each and every credit account ensures that you are in a position to chase outstanding debts very quickly following the arrival of the overdue date.

You cannot expect your customers to pay promptly if you don’t issue their invoices in a timely manner. Make sure you get your invoices are out the door in a speedy fashion.

Set clear credit policies at the outset of any credit agreement: Be clear about what you expect from the very beginning. Customers will often have their own credit policies, such as paying after 45 days. If it is your policy to only extend credit for 30 days you need to decide whether you want to play by the customers rules or pass on the business.

Get a signed contract: A credit contract does not need to be a complicated document that takes a significant amount of time and resources to prepare. It can be as simple as spelling out what you will provide and when; what the customer must pay and when; how disputes are to be settled; and penalties for late payment.

Always conduct a credit check prior to the extension of credit: Credit checks can save a significant amount of heartache and prevent your business the burden of customers that can’t or don’t pay on time. By providing you with an overview of the financial health of a prospective customer, a credit check allows you to make an informed decision about the extension of credit.

You would be amazed at the number of small businesses that fail because the owner did not see a cash flow problem in time to do something about it. The key is to always be able to answer the question - what do I expect my cash balance to be six months from now?

Here is a simple rule to follow to make sure you have an accurate cash balance on your books. You do the work or have someone else do it.

Even the most experienced person will fail if they are making business decisions using inaccurate or incomplete cash balances. This is fundamental cash flow 101.

It’s very unforgiving if you don’t. Remember, cash is king, because no cash means no business.

It’s important to recognize that the basics of cash flow 101 are what keeps your business alive.