If you are like many small businesses, you don’t just sit at your desk all day and shout orders to people. You are doing everything. And depending on the time of year, as you well know, your level of hands on activity can vary depending on the seasonality of your business. If you are in lawncare or a pool construction company, you might be full steam from April well through October.
Collection agencies that work with small business hear from owners and other all the time when things such as cash flow start to suffer. And because many in business get too busy to take care of the back end of their operation sometimes, finances begin to take the first fall.
We strongly suggest a regular review of your small business finances. In fact, even if you are very busy, you should at least sit down once a month and make sure everything is in order.
Below are a number of regular items for your review.
Review all your bank statements.
This should be one of the first things you do each month in your review. Make sure you sit down and review all your bank statements. This also includes any credit card statements or other revolving accounts you might have for the business. Check for regular activity to make sure the amount you may have authorized is in fact the amount on your statement. And of course, check to make sure there is not any unauthorized activity on your accounts.
If you have anyone other than yourself using a company credit or debit card, make sure they are providing documentation on every item or purchase they use that card for.
Review accounts payable.
Make sure you are putting a careful look at the money that goes out the door. Check all your incoming invoices for accuracy and make sure there is no duplication or other items tacked on to any of your vendor invoices without explanation or authorization. If you have any doubts, make sure you contact your vendor as soon as you can to resolve any discrepancies in amounts or service.
Review procedures with staff.
Depending on the type of your small business, you may have more than a handful of people that have access to cash and other forms of payment. First, make sure you have systems in place to make sure everyone knows how any form of payment should be handled. Second, make sure you are conducting regular reviews with those team members to make sure there are no mistakes or mishandling of money. This includes everything from any retail operation and checks or credit card payments that could be handled out in the field.
Pay your bills on time.
You probably understand where we are coming from here because we’re a collection agency. And you would be correct. You need to pay your bills and your vendors on time. We can think of at least two reasons. First, as a small business, you know how important cash flow is to the success of a business. In all likelihood, your vendor is another small business. But two, if you do not pay your bills on time, it can cost you more money in possible late fees, now you have to cut a check for may two months of service and it causes you more time to get caught up which can take you away for running and growing your business.
Invoice on time.
It all depends on the type of business you are running but you need to make sure you are invoicing on time and at the very least, every month. You cannot go more than 30 days without sending out your invoices. First, your customers expect an invoice but second, delaying any type of invoice will only hurt your cash flow and snowball from there.
Speaking of cash flow…If you do one thing on a regular basis, it should be monitoring your cash flow. Nothing can hurt your small business quicker than ignoring cash flow. As we mentioned, the first step is to make sure you are invoicing on time. No exceptions. But you also need to review what cash foes in to your business and what is going out. You should sit down with your bookkeeper or whoever you have keeping an eye on your accounting.
What’s that? You don’t have anyone monitoring your accounting or paying your bills?
If you need help in your small business, then get help. A couple of ways we recommend getting help.
First, if you do not have a bookkeeper, then find one. If your business cannot support someone full time, consider hiring a person part time or outsource it. There are plenty of qualified bookkeeping services out there. Check with your local Chamber of Commerce or your industry association for referrals. We all have our strengths and weaknesses and if numbers are not your strength, get a bookkeeper.
Second, when it comes to cash flow, many times the cause of poor cash flow is customers not paying you. If you have tried to get your customers to pay with internal resources or you just don’t have the time or those resources, you need to consider working with a reputable collection agency. Find a collection agency that works with small business, one that mirrors your values as a business and uses tact and respect when dealing with your hard-earned customers.
Finding a collection agency that also has a low-cost solution to your accounts that are past due is also a plus when you’re a small business.
Need more tips on keeping more of your hard-earned cash? Check out more articles on our blog.