Sales Are Great- But How Do You Pay the Bills?

Every business runs into this problem-the revenue and profits numbers look OK, but there is not enough cash and accounts receivable are increasing and stretching out. Today’s economy is not very conducive to generating revenue or collecting the money. Here are some ideas from other business owners to help you weather the storm:

1.  Start at the beginning: Whenever possible insist on and collect a deposit, a down payment or whatever you call up front money. If you are working on a project basis, make it clear that work cannot progress if payments do not keep pace.

2.  Harmonize your billing cycles to your customer’s accounts payable schedule. If they pay bills on the 15th and 30th. Make sure your invoices arrive before those dates. If terms are net 30, hold them to net 30.

3. Get a name and meet, or at least talk on the phone and establish rapport with the person who processes your invoices. Have someone make sure invoices are received and check to see if there are any problems.

4. Have a good collections function in your business-on staff or outsourced. Make sure they represent your company professionally but also do not give up easily.

5. In the case of large amounts owed, sometimes it works to say that you or someone from the company will stop by on X date and pick up the check.

6. Be an important and helpful service/product provider to your customers to reinforce a high priority of being paid.

7. Resort to collection agencies only as a last resort and be prepared to get cents on the dollar and lose the client.

8. Having a relationship mentality and a clear view of what individual customers mean to you over a long period of time will help you create and manage exceptions to your policies.