Cash Flow Problems?

I recently read a short news brief that indicated that the number of corporate bankruptcies in 2008 has already exceeded the total number in 2007. While sometimes there are circumstances that are industry-specific, and other variables, we often find one of the main reasons for companies approaching a situation such as bankruptcy is a lack of cash flow due to poor accounts receivables methods. As we all know, there are some people that legitimately have trouble paying their bills and then there are some that just do not pay.

We’re also finding that some banks and financial institutions are pulling back on the amount of credit they are extending companies which force them to get a little more assertive in their collection process.

In these uncertain times, now more than ever, we all need to be very conscious of our accounts receivable methods and make sure we are staying on top of customers and clients that fall behind on payments. Some quick tips on what you should pay close attention to:

Early intervention: Don’t wait six months to step up your collection process. Act early.

Invoice on time: Have a regular billing system. Don’t just bill when you have free time. Make it a point to bill on a regular basis.

Be flexible: In these uncertain times, we all need to be a little flexible. That does not mean you need to back off. It means you need to try hard to come up with a solution that fits into the needs of both parties. Stay in constant contact with the person that owes you money, come up with a payment plan if necessary, and try hard to keep your customer with moral and ethical approach to your collection procedures.