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E-Myth – “Why most small businesses don’t work & what to do about it”

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Part-time CFO Services | Best Practices When Making Collection Calls

It may be difficult for business owners to understand the best practices when making collection calls to their clients, which can result in having their cash flow being affected says part-time CFO services. By understanding the best ways to contact their clients, and how often in order to get them to pay their bills can help an entrepreneur ensure that they do not run out of money in their business. Since half of all entrepreneurs will fail within five years, and 29% of those failed entrepreneurs will say that they ran out of money in their business, running out of money is the second most common reasons why entrepreneurs fail. business owners should be proactive in their business to avoid situations that will cause them to run out of money.

In order to help an entrepreneur understand how to use their Accounts Receivable aging summary to collect money, is they should understand how their report will be organized. Part-time CFO services says that the summary will include a list of all of the customers who owe money to the business owner, what amounts and organized by the date that those customers started owing the business owner. There will be several columns that indicate how long that invoice has been outstanding, and business owners need to pay special attention to the column that has ninety days plus past due.

The reason business owners need to keep a very close eye on all invoices that are outstanding for that long, is because it can be very difficult for entrepreneurs to collect money from clients once they are outstanding that long. Part-time CFO services says the reason why, is because since most contracts do not allow clients to be outstanding for that length of time, a business owner knows that they have broken the contract but need to understand why. A client may be unhappy with the work, and there but intending on paying, or the business might be having difficulty paying their invoices. The sooner they can resolve the situation, the earlier they can collect the money.

The next thing that is important for entrepreneurs to understand, is how often they should be reaching out to their clients that owe the money in order to collect. Part-time CFO services says that many entrepreneurs believe that they are doing their job well if they are making collection calls once a month. However, monthly should be considered only a bare minimum. Instead, business owners can get into the good habit of making collection calls every time they are about to disburse payments. The reason for this, is because they will do a bank reconciliation that will show them how much money they have in their business. If they do not have enough money, they will need to engage in collection calls to bring that money in, and if they have enough money, it still good practice to get into the habit of every time they make payments to make collection calls in order to keep the flow of money in their business.

When business owners understand the best practices when it comes to collecting money in their business, they can confidently be contacting their clients, so that they can get the money that they are owed, which will help them ensure they continue to have a positive cash flow in their business.

Part-time CFO Services | Best Practices When Making Collection Calls

By looking at the Accounts Receivable aging summary, business owners should expect all of the amounts listed to represent real money that they expect come back into their business says part-time CFO services. They should consider all of the money as work that they have done, and needing to collect money for work that they have done should be an extremely high priority. By understanding the best practices when it comes to contacting clients to collect payment, can help entrepreneurs do so confidently, and regularly enough to ensure they collect all of the money that they are owed.

The most urgent part of the accounts receivable aging summary, is the ninety days plus section. The reason for this, is because these clients are the least likely to pay a business owner. While many entrepreneurs do not want to upset their clients by reaching out regularly to collect that money, part-time CFO services recommends that they contact them every single day through phone call or an email. They should not be worried about upsetting a client that is refusing to pay them for work that they completed. Making the argument that a client that is not paying, is a client not worth having. Therefore, if they upset clients in the process, that is okay as long as they get paid.

Many entrepreneurs wonder about the reliability of their Accounts Receivable summary, and that is why they hesitates to make collection calls to their clients. Part-time CFO services says that rather than wait for their bookkeeper to update their Accounts Receivable, business owners can learn how to do that in their QuickBooks software, so that they can ensure that the information is as current as possible. By learning how to enter in payments, entrepreneurs can ensure that they are helping their Accounts Receivable summary reflect all payments. Also, business owners can learn how to very easily upload invoices that they generate directly into QuickBooks, so that they are keeping the summary as up-to-date with all of the most current invoices as well. By doing this, can ensure that the summary is up to date, any time a business owner needs to review the information, or make a collection call.

By being able to review their Accounts Receivable summary, find the most at risk for not paying customers and contacting them for payment as often as needed, business owners can ensure that they are doing everything that they can to get payments of all the invoices that they are owed. Also, by learning how to update the information in QuickBooks, can help business owners ensure that the reports they pull are accurate, and up-to-date so that they can be confident whenever they need to make collection calls.