“An ounce of prevention is worth a pound of cure” Benjamin Franklin – Sayings like this stick around for for 3 or 400 years for a reason. Losing weight is harder than not gaining, having heart surgery is harder than exercising for 20 minutes a day, and proactively preventing collection issues is easier than collecting bad debt.
No one likes collection work, if you are one of the rare people who likes making collection calls, I salute you. But the average person working in a small business avoids making collection calls, avoids writing collection letters, avoids reviewing credit applications or defining credit policy. All jobs that must be done in order to prevent bad debt and to get paid on time.
Recent polls from American Express Small Business indicate that accounts receivables is the “top cash flow concern” of small business owners. Translation: if accounts receivable are causing cash flow concerns you aren’t being paid on time.
If you aren’t being paid on time you probably aren’t doing your collection work.
If you aren’t doing your collection work it may be that you’ve fallen for the “bad economy wrap”. Don’t!
You can impact your cash flow and your DSO with your collection efforts.
For small business, procrastination and collections seem to go hand in hand. There always seems to be something more pressing to do. One of the best ways to overcome procrastination is by developing clarity. We’ve found over the years that while most small business’s have their core competencies documented and well organized, their accounts receivable department is not.
Over the next several days and weeks we’ll be posting a series designed to help you organize you accounts receivable department and your collection efforts for best results. If you’d like to subscribe to this series email me at email@example.com.
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