In our previous article we reviewed the basics of accounts receivable management, using past articles as a refresher. In this second part of a five-part series on B2B collections we’re going to cover the basics of cash flow, referencing two of our more recent articles to highlight some strategies for preventing unnecessary financial loss.
In “Preventing Cash Flow Crisis” we mentioned that in this current economic climate businesses are going to encounter more than the usual number of slow-paying clients. Among the tips we offered were the following:
- Perform credit checks and reference checks on new clients.
- Be in regular contact with your key accounts and regularly review their payment patterns.
- Make sure your accounting system is well organized and strictly adhered to
- Have a financial reserve for the tough times.
- Get payments by credit card or by online banking methods.
In “Cashflow Issues: Questions To Ask Yourself” we really put the pressure on you, the business owner, to take a hard look at your policies and practices to determine if you are actually contributing to your own cash flow problems. We asked two important questions:
- What is the average age of your accounts receivables?
- Are you billing your customers in a consistent and timely manner?
We then provided a checklist to help you identify areas of your accounts receivable activities that could use improvement:
- 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?
Our goal is to empower you with the understanding that you are the chief influencer of your cash flow. Yes, you rely on payment from your clients to maintain your business. However, with good organization, solid standards (along with solid advice), and consistent follow-through, you will be the master of a healthy cash flow.
The Jayaram Law Group 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.