Just because you’re managing and operating a small business doesn’t mean you need to act small. And that has never been truer than in the case of accounting, tracking the money that goes in and out of your business, and detailing exactly what your customers owe you.
Gone are the days of verbal commitments and writing orders and changes on pieces of scrap paper. And if your business is guilty of these or any other older and simplistic tactics to run your business, we have a few pieces of advice for you to make sure you can improve your cash flow and get paid for exactly what you’ve done. And keep track of it all in the process.
And if you get to the point where you need to hire a debt collection agency for customers that have not paid you, our advice will come in handy when it comes to preparing for the next step in collections.
There is accounting software for all types of business
You do not have to be a large corporation to enjoy the benefits of accounting software. There are all types of options to fit your budget even if you are running a small business. There are not only name brands that you may be aware of that are very affordable for any size business but depending on your industry, you may be able to enjoy some specific software for managing your business overall. For example, many of our lawn care debt collection clients enjoy software specifically created for the green industry. And many of those connect with our software here, an added benefit.
In short, get the proper software to manage your business most effectively.
Run an aging report for your accounts receivables
When you have the proper accounting software, you can get a much better snapshot of the payment habits of your customers. That’s where an aging report comes in handy. You can see which accounts are outstanding and if you dig a little deeper, you may be able to determine which customers pay you late on a regular basis. If you don’t know how to run an aging report, contact your CPA or your professional bookkeeper. When we provide our free consultation for debt collections, this is one of the first things we will discuss with you. How far out is your average customer?
Increasing payment options for your small business
If you’re just accepting paper checks then it’s time for your small business to get up to date with the many methods that you can accept payment from customers. We’re not saying that you should not accept a traditional check, but you should be accepting credit cards and even set up some type of online payment portal. Let’s say you’re running some type of home services company like plumbing or electrical. Your employees can be equipped with the tools to accept payment right there at the home. And there are many very affordable tools to implement a payment portal on your website.
Proper communication with your customers is one of your best tools
When it comes to debt collections and the need for collection activity, one of the main reasons your business may get to this point with a customer is because of improper communication. That can come in the form of dictating payment terms and obligations right at the start of your relationship or it can be the lack of communication when a customer has not paid.
Take a step back and gather the appropriate staff and analyze the communication methods you use at every step of the customer experience. This involves what you’ll be doing for the customer when you’ll be doing it when it might be completed as well as their obligations to you at certain milestones. We spoke about software a minute ago but look at tools you can have to keep track of work you’re doing for clients and more importantly, track changes in customer requests.
Also, analyze how and when you communicate with customers when they do not pay. Are you communicating on a regular basis and are you communicating in a respectful and tactful manner? Being nice when a customer owes you money can make a world of difference when it comes to getting paid. You may be angry, but you cannot let that show in your communication. Be as professional as possible.
If you prepare properly and put the proper tools in place, managing your accounts receivables does not have to be an arduous task for you or your staff. The bottom line, get the proper systems in place and your cash flow will improve.
Book a free consultation with our debt collection experts today and find out how we can help you manage accounts receivables much more effectively!