Archive for September, 2013

How to Ensure You Get Paid in a Timely Fashion

cashinhand

Cash Flow is an incredibly important part of running a successful business. As our business has matured, we have been able to implement some programs to improve our cash flow. We deal primarily with Business and Government customers. Many customers prefer to use Purchase Orders, but we are also seeing a significant amount of business transactions where the customer wants to use a credit card.

Credit card users get points and airline miles, which is becoming more popular. Although there are fees involved, now running approximately 3%, it is advantageous for your businesses to accept credit cards as a form of payment. Due to the amount of fraud that exists, we charge each credit card at the time of purchase and have little or no customer issues. When dealing with corporate Purchase Orders, Google is an incredible tool to research a company to see if they are credit worthy. It is important to bill customers when you are invoiced and then following up to make sure the invoice is in their system to be paid. On projects where there is a longer leadtime, we get deposits of 50% to help with the cash flow. It is not uncommon today for large companies to pay beyond 30 days, so managing the accounts receivable is an important function, especially for small businesses.

The best advice I can give when extending credit is to go with your instincts and gut reaction. If it doesn’t feel right, get paid up front. There have been times that we have reluctantly given credit and unfortunately it was a bad decision. As a business owner who prides himself in paying our bills on time, getting burnt for money is a very unpleasant experience. Nothing is foolproof, but by spending the time to follow procedures will minimize your exposure to bad debts or fraud.

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