One of the most serious hurdles businesses face while managing revenue and cash flow is the "accounts receivables."
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In fact, businesses that face problems with receivables get into a danger zone sooner than anticipated causing problems leading to insolvency or bankruptcy. It doesn't have to be this way, if only you follow a few tips on receivables management. Dodgy customers who refrain from paying always exist; the ability to manage bad receivables can help you sustain your business:
Pay first policy: A highly effective way to kick bad receivables good-bye is to have a "pay first policy" in place. Much like the policy magazines used for subscription charges – and some petty cash business that street vendors specialize in – receiving payments from the customers even before products and services are delivered is the best way to keep your cash flow positive and to obviate the "bad receivables" problem entirely.
Recurring Invoicing: With smart tools within invoicing systems and billing software available today, your business can use recurring invoicing facilities provided therein. Just set the invoicing dates, product particulars and set it to auto-billing mode and your invoicing software will do the rest. Customers will receive invoices on time (as gentle reminders). This enhances your receivables situation tremendously.
Make it easy for customers to pay: In my years of experience as a business consultant and coach, I was often surprised at the complete rigidity some businesses operate with. Most businesses have just one or two options for receiving payments from customers which greatly restricts the flow of in-bound cash. Businesses should ideally make arrangements for receiving payments in many forms – like using payment gateways on their websites, credit or debit cards, online banking, demand drafts, cheques, Cash on delivery, etc., -- the more alternatives, the fewer the excuses.
By solving your problems of funds receivable, pending credits, accounts receivable, etc., you will literally boost your cash flow which, when cleared, tremendously boost your profits. It takes away the headache of having to spend time and effort trying to manage dodgy customers. Effective collection systems bear the benefit of rich cash flow – the essence of any surviving business.