Setting up any sort of retainer or regular payments seems to be a great business model. Subscribers to software-as-a-service are auto-billed or auto-renewed regularly, funding any updates to the product and keeping cash flowing. The challenges arise with missed payments or non-paying customers.
Chasing down an unpaid invoice can take away time and resources that could be better served elsewhere in your business. It's important to understand when and how to follow-up on invoices. Obviously you don't want to appear too needy but you don't want your clients getting away with paying late or not at all, either. And when should you get help from a professional collections service?
As we move into the new year and look back on 2020, we are able to get a clearer picture of what topics to cover in 2021. The mission of this blog is to inform our readers, whether they're our clients or not. It's important for us to help tech entrepreneurs, startup businesses, small businesses, freelancers, independent consultants, manufacturers and other business-to-business organizations build better relationships with their clients. We believe better relationships mean better cashflow.
As if the month of December isn't blurry enough, your accounting department is working on year-end activities. Whether your business is a single-person shop or an enterprise corporation, the end of the year may also be the end of your fiscal year. Common activities during this time will provide insights into your business' financial situation including:
It's time to take a closer look at some of these numbers to figure out exactly how well you're following up on those accounts receivable invoices.
As if it's not challenging enough to deal with late paying clients, the pandemic and the holiday season can add more stress. Your business may be working to resolve late payments to close out your year. Your clients may be struggling with cash flow shortages due to the pandemic. Is there a gentle-yet-firm way to ask that your invoices are paid on time?
Small businesses and startups must think on their feet, and that includes getting their accounts receivables paid quickly. Business relationships are an integral part of the success and growth of these companies. Protecting these relationships should be a part of the collections process as well.
The pandemic has unfortunately hit many businesses right where it hurts. Economists have discovered a current proliferation of businesses who may actually already be "dead inside". Zombie companies earn just enough money to scrape by, acquiring more debt along the way and relying on bailouts to keep going. The problem is that they're unable to afford the cost of the debt and are a high risk to investors. One small blip on the radar, a bad quarter or market event, and they're DOA.
It's frustrating when your clients aren't paying their invoices on time. When you find that they are actually "walking dead", it can be downright terrifying.
When you're trying to learn more about your business finances, a cash flow statement is a must. This financial statement paints a clear picture of how your business is managing its cash to pay debts and fund operations. The cash flow statement can help determine the success of your business and be an important indicator of potential to an investor.
Does your business suffer from late paying customers? Are you a flying-by-the-seat-of-your-pants A/R department of one? Do your clients get away with paying your business late or not at all without any consequences?
If you answered 'yes' to any of these questions, an accounts receivable collections policy can help you:
Get paid on time
Organize your accounts receivable process so you can handle the job alone
Feel like you have some power if your invoices aren't paid
There's no question that businesses and cash flow have been affected by the recession and pandemic. Some companies have taken advantage of this time to pivot, rebrand or change focus to save their businesses and keep their customers happy. In the middle of all of that, you might be facing the stress of lacking resources necessary to keep going. You might also be surprised to learn that you actually already have the company funds you need.
