If you’ve discovered that you’re having trouble meeting your company’s bills, and a certain set of rather particular business customers take up an inordinate amount of your time, then you need to start asking some questions regarding your cash flow. Especially if those demanding customers are typically unsatisfied and just happen to be the ones who owe you money.
The two most important questions you need to ask yourself when you are experiencing cashflow problems are:
1) What is the average age of your accounts receivables?
2) Are you billing your customers in a consistent and timely manner?
If you have late-paying customers then it’s time to reassess their value to your business. Like many business owners, you may be holding on to them out of fear. Late payment is better than no payment, right? It’s an assumption that only works if you have no plan to replace the revenue. If you believe there are no more customers to be found, then it’s probably because your time has been eaten up with your late-paying customers, therefore leaving you little to no time to find new ones.
If you have some problem customers, keep them in mind while you ask yourself these following questions:
- Do I encourage on-time payment by enforcing late fees, or do I let it go because of the discomfort of confrontation?
- Do I permit my business customer to intimidate me?
- Am I sending out invoices and statement on time, along with reminders and follow-up calls?
- Do I still provide a product or service to this customer even if they have an outstanding balance?
- Do I experience an elevated stress level when dealing with this customer?
- Does my problem customer demand more time than my other customers who are receiving the same service?
- If the customer can’t pay on time, do I ask for at least a portion of the balance due?
Hopefully this checklist will help you identify areas of your accounts receivable activities that could use improvement.
One more question deserves to be asked: If you could get back all the hours per week that you spend on this customer, and then spent those hours engaging in sales and marketing, how fast do you think you could get more new customers? The likelihood as that with those extra hours you could replace a poor paying customer with a good paying customer, as well as increase you productivity and decrease undue stress. Ultimately, your cashflow will improve.
REFERENCE(S): http://www.inc.com/marla-tabaka/2009/05/poor_cashflow_look_at_your_acc_1.html
The Jayaram Law routinely and successfully assists its clients in their business-to-business (b2b) collection needs. We take pride in obtaining payment on accounts receivables without fracturing critical business relationships or engaging in time-consuming and costly litigation efforts.
If you need business debt collection services conducted in a professional manner, contact our B2B (business-to-business) debt collection law firm by calling 312.454.2859 or visiting www.jayaramlaw.com.