When you run a small business, you have a lot to think about and a lot to stay on top of. Between your product, your employees, your clients and your finances, it’s easy to fall behind in one area or another.
Though it’s easy, it’s also harmful, and you don’t want to come up short in any of these facets.
If you’re noticing that your finances are not where you’d like them to be, check your accounts receivables.
This could be an area where you need to pay some extra attention. Accounts receivables are critical to your business as that’s where you keep records of what clients own you what money. If you lose track here, you could be missing out on your income.
Dependency on Your Incoming Revenue
The rest of your company’s financial state is often dependent on your accounts receivable as that’s where the majority of your income comes from.
Some businesses have an easier time getting these bills paid, while others typically have a longer wait time before seeing this income.
For instance, hospitals often notice that patients wait longer than with other businesses to pay bills.
In the article, “Measuring the Performance of Hospital Accounts Receivables”, we see the effect of accounts receivables on all other aspects of finances in a business, including payroll, investments, expansion and expenses.
Follow these steps for productive accounts receivable records:
- Good records are imperative in this area, and a good accounting program is necessary.
Whether it’s a program like Microsoft Excel or Intuit’s QuickBooks, you need a solid accounting program.
Set up an account for every customer, even if it’s a one-time interaction. Many business owners still like to keep a manual filing system as a backup; that is up to you.
- Keep on top of outstanding balances.
Use professional communication, whether it’s electronic or paper, and include your business logo, company name and contact information on all communication.
Send out consistent bills in a regular cycle to those customers who owe; you don’t need to send out bills to customers with zero balances.
- Decide when you will turn past due accounts into a collection agency.
Make sure you notify your clients when you are doing this and how to rectify when they pay.
Also, by maintaining good records, you can allow your clients to pay at a slower rate as opposed to all up front.
This can build loyalty and earn you more business, as some people need to pay this way. Do what is best for your clients and yourself.
Again, it’s hard staying on top of it all as a small business owner, but if you’ve made the commitment and investment in your business, you need to maintain solid records and communication.
It’s all part of the business.
As a business owner, how do you go about making sure you get paid on time?
About the Author: Heather Legg covers topics pertaining to small business, marketing, and social media.