One of the subjects we went over was specific strategies to collect on more of the money you are owed from your customers (i.e. receivables).
At that workshop were over 150 business owners from north America and even a few from overseas.Here is what Niraj, who owns a personal services firm, shared with me by email 14 days after the event:
“My belief in life is that if I put the hard work in, then God will help. In my case for business, last year it came in the form of Maui Mastermind or you. I took many of strategies you taught and applied it and things changed. Similarly, this years in San Diego, I felt that it would be a good review from last year. However, I was amazed that you changed your presentation and it fit my current needs. After coming back, the first thing I looked at was my A/R and found $20,170 that I did not bill for. I want to thank you for opening my eyes on these subjects.”
Imagine this,$20,170 of pure profithe now gets to enjoy.Remember, it’s not the sales you make that power your business, it’s the cash youcollecton the sales you make that powers your business!
Here are 6 tips to collect more of the receivables you are owed.Enjoy!
1.Consider the timing of your bill. Collect up front. If you can get paid before you fulfill your product or service you can eliminate a whole lot of hassle and additional cost chasing down payment later.
2.Don’t wait to bill. If you can’t bill before you fulfill, at the very least, give your customers a bill at the time the services are rendered. Remember, the longer you wait to bill, not only the longer before you get paid, but the more likely you are to have collection problems.
3.Get your clients to prepay an entire year by providing a terrific incentive to do so. This will help your cash flow plus eliminate the need for the entire accounts receivable collection process. Incentives might include a special add-on bonus or a discount.
4.If your business model must have accounts receivable,front load the collection process. Send statements out right away and start your follow-up procedures right away, not after 60–90 days have passed. Put that energy in upfront when your odds of collection are highest and payment means more to you.
5.When you ask for money,make it easy for your clients to pay you.Include a self-addressed envelope. Make sure the invoice clearly says who to make the check out to and for how much.
6.Build a “cost” for your clients into your standard contracts. If you are going to be financing your clients’ purchases then you should get paid for your trouble. Make sure your contract includes a monthly financing charge for all accruing bills. Make sure it also states that they are responsible for all reasonable costs of collection. Finally, where possible, get the business owners of your clients to sign individually and not just use the name of their business.