Effective Collection Call Strategies | Part Time CFO Services
Collection calls are an extremely important activity that business owners can engage in says part-time CFO services. The reason is, is it helps an entrepreneur ensure that they are staying cash flow positive in their business. Since running out of money is the second most common reason why entrepreneurs fail in Canada, ensuring that they are being proactive in collecting outstanding amounts can help ensure a business owner is doing everything they can to avoid running out of money in their business.
In order for business owner to be able to effectively call their clients with confidence, they should understand first of all how to read their accounts receivable aging summary. This is essentially a list of all of the customers that an entrepreneur has that owe them money going to have a list of all of the customers, all of the amounts that they owe, and organized by the date of when they started owing the money. The far left column is going to be the most recent invoices that an entrepreneur has generated, moving to the right, the last column is going to represent all invoices that have been standing for ninety days or more. Part-time CFO services says that business owners should be most concerned with the invoices that are most outstanding, and should be the first column that entrepreneurs look at when reviewing their Accounts Receivable aging summary.
The reason why entrepreneurs need to concerned with all of the invoices that have been outstanding longer than ninety days, is because those are the most difficult to collect. There are several reasons why they might be difficult to collect, from a client being unhappy with the work, to on entrepreneur having their own financial difficulties. Since most payment contracts are for thirty, forty-five or sixty days, businesses that are outstanding for over ninety days have broken the contract and if the entrepreneur does not know why, that can make collecting that bill difficult. Business owners can avoid getting to the situation by engaging in regular collection calls so that they never have amounts that are outstanding that long. However, once an entrepreneurs in that situation they need to move very quickly and consistently to ensure that they collect that money.
Part-time CFO services recommends that entrepreneurs that have clients that are owing money over ninety days, should call or email them every single day. The reason why many business owners do not, is because they are worried about of setting their client, but they should question if they should be worried about upsetting clients that are not paying them. By not worrying about upsetting clients, and be more concerned with increasing cash flow can help entrepreneurs be confident when they make those daily collection calls.
By focusing on the most important invoices to collect, business owners can ensure that they are focusing bringing money into their business in the most meaningful way, says part-time CFO services, so that they can avoid running into cash flow problems.
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One of the reasons why business owners may not be engaging in regular accounts receivable activities, is because they do not know how often they should be contacting their clients who with the money. By learning the best practices when it comes to effective collection call strategies, can help entrepreneurs have the confidence needed in order to make those collection calls that they can bring money into their business regularly and consistently.
Many entrepreneurs believe that a monthly collection call is what they need to be doing in their business to get customers to pay them, but part-time CFO services recommends that if there only doing it monthly, that is merely a bare minimum. Best practices should be for entrepreneurs to engage in collection calls any time they do any of their accounting processes. An example of this would be if an entrepreneur is doing a bank reconciliation in order to run payroll, this is a good opportunity to also do collection calls. The reason why, is if an entrepreneur is making plans to disburse money, they also need to have a plan in place on how to bring that money back in their business. Another reason why, is because if an entrepreneur does run a bank reconciliation, and find that they do not have enough money in their business to run payroll, they are going to need to do those collection calls in order to bring in the money that they need to meet their payroll requirements. This means, that an entrepreneur is going to be doing a collection at a minimum every two weeks, because most entrepreneurs pay their staff every two weeks.
Another best practices when it comes to utilizing their Accounts Receivable aging summary, is helping an entrepreneur ensure that their summary is updated often says part-time CFO services. While it might be too overwhelming and time-consuming to have an entrepreneur try to update all of their accounting in QuickBooks, however if they can learn how to update two different things in QuickBooks on a regular basis, can help their Accounts Receivable aging summary be accurate. The first thing that they should be doing, is every time they generate an invoice in their business, is they update that invoice directly into QuickBooks. This should not take a long time, and can be a regular part of their invoicing protocol. The next thing that entrepreneurs can do on a regular basis, is that whenever they receive a payment, they can enter that payment directly into QuickBooks and apply it to the correct invoice. By doing these two things regularly, entrepreneurs can ensure that their Accounts Receivable summary is up-to-date whenever they need to review it in order to make collection calls in their business.
By learning how to do collection calls effectively, and ensure that they have the best information possible to help them make those calls, can ensure that an entrepreneur is being as proactive as possible in ensuring their bring money into their business which can help them avoid the cash flow problems that affect so many other entrepreneurs.