Posts Tagged ‘accounts receivable’
Tuesday, July 17th, 2018 | The Cash Flow Group | Comments Off on Credit Control Tips | Cash Flow is King in Every Business
So, what is credit control? Every business wants to earn money and make a profit. Businesses offer quality goods and services to their clients and stand out from their competitors. It makes good business sense to then invest this profit back into the business. Then they can provide more a comprehensive list of services and offer better products for their clients. This in turn ensures that clients are then receiving the level of service they would expect.
All of the above makes the ideal business model, maybe in the world of make believe, but let’s step into the real world of business & 2018. Since the recession of 2008, businesses have been suffering as a result of late payment behavior by their clients. Billions of dollars are written off by US businesses each year because of late payments and poor credit control . It’s become a norm for big businesses to hang smaller businesses out to dry. They go unpaid for long periods of time hoping they can cut a deal with liquidators and settle only percentage of what was owed.
This scenario is a very sorry state of affairs. How can we resolve the issue ensuring clients pay accounts on time? Credit control is the answer. These simple tips can be implemented to your business to deliver results straight away & ensure that your cashflow remains intact:
1. Master credit control by clearly setting out your Payment Terms & Conditions
It’s extremely important to set out company payment Terms & Conditions in writing. This can be included in your Terms & Conditions on contracts or credit application forms and stated on invoices. It amazes me the amount of businesses who simply don’t have any payment Terms & Conditions. If they do, their clients are not aware of them as it has not been brought to their attention before. Debtors are very conscious of what they have to pay but this must be set out in black and white. If not, the company has nothing to fall back on should the debtor resist payment. Set out your Terms & Conditions in clearly to your clients to create a clear and consistent approach.
2. Send your invoices out with the goods or services
A lot of businesses we deal with raise invoices to their clients at the end of start of each month, by this time their client could have been in receipt of the goods or services they ordered for two to three weeks already before receiving an invoice from the company. This does not make good business sense, and invoices sent after at the end of each month etc are often paid late, and there is a stronger likelihood of them been settled quicker if they are in the client’s possession straight after the business transaction has happened. Sending invoices throughout the month and immediately after goods or services have been supplied is also beneficial because the company will have a constant cash flow coming in to their account.
3. Don’t be afraid to approach and speak to your clients about payment
By law you have to allow clients time to pay before you can pursue them legally for non-payment. This does not stop you calling or emailing them to ask when you can expect payment. Accounts receivable departments should have a robust process in place for this. They can call clients after invoices have been raised to deal with queries or disputes promptly. Then call or email them 15 & 30 days after the invoice has been raised to see when payment will be made. This demonstrates to clients that the business is very on the ball with their credit control. After 30 days contact should be made with the client on a daily basis. If this contact is not made it, implies that the company doesn’t need the invoice paid all that urgently.
All of the above are easily implemented into a business in turn leading to big changes within the business. Small modifications can lead to invoices being paid on time or more promptly.
Tags: accounts receivable, commercial debt collection industry, credit control, Florida, Ft Lauderdale, improve payments, Miami Fl, The Cash Flow Group
Tuesday, July 17th, 2018 | The Cash Flow Group | Comments Off on Miami, Fl Debt Collection | The Time To Act Is Now
Island time in Miami, Florida?
Here in sunny Miami, Florida many individuals run on island time…or peninsula time technically. Issues can be put off to tomorrow for months on end. Treating your debt collection issues that way can be fatal for recovery. The age of an account can have a great affect on it’s collectability. In most circumstances, the older an account is the more difficult it is to collect.
As time goes on it can become more difficult to locate a debtor. Even a business may relocate from Ft. Lauderdale to Miami, Florida and change names. People move to new homes, new towns, new states. They change phone numbers and jobs. They may do this several times over the course of a few years. Each change can make locating a debtor more difficult. If you can’t find them, you can’t get payment from them.
Statute of Limitations on Debt in Miami, Florida Collections
The collectability of an account goes down as the account nears the statute of limitations. The statute of limitations on an account is the number of years you have to pursue an account from the last date of charge or payment (whichever is most recent). For example, the statute of limitations in the State of Florida is 5 years for a written contract. You would have 5 years from the last date of payment or the last charge to take that account to court. Each state decides the statutes of limitations for different types of accounts – open accounts, judgments, oral contracts,etc.
The faster you can move forward on an outstanding account, the more likely you are to receive the payment due to you. This is truly a situation where time is money and the more time you let pass the greater the chance you’re letting your money slip away. Be proactive about the money owed to you; Cash Flow Miami is the solution.
Tags: accounts receivable, commercial debt collection industry, Florida, Ft Lauderdale, improve payments, Miami Fl, The Cash Flow Group
Friday, May 10th, 2013 | The Cash Flow Group | Comments Off on BEWARE OF FALSE ‘PROFITS’ IN ACCOUNTS RECEIVABLE
I have observed many companies, (in my 31 years in the debt collection industry) being blindsided by the reality that they stand to take a substantial hit on what they were holding in their account’s receivables that were past due. In essence, they were counting on and believing in false profits. The all too common assumption is that as long as a customer is buying and my receivables are growing, we’re making money. The thinking seems to be that cutting a non-payer or very slow-payer off from more credit will, A – cause you to lose needed revenue, and/or, B – cause the customer to not pay you as they seek credit and services elsewhere. In other words, we want to believe that the customer will eventually pay, catch-up, etc. We certainly don’t want to believe we’re about to get screwed over with an unpaid receivable.
I have seen companies play this game of ‘roulette’ for a year and more allowing customers to receive their goods or service, all without paying, and all because of the mind-set that I mention above. Companies just hate to turn away revenue, and they just want to blindly believe, in spite of all the signs and statistics to the contrary, they’re eventually going to get paid. You know the story, ‘they know better’, ‘they know their customer’, constantly playing amateur psychologist, emotionally attached to the situation, because it’s money involved, and you know if there’s anything that can get us emotionally attached, it’s our money…
News Flash! All monies that are written off are pure profit dollars. All operational costs, salaries, taxes, etc. have already been paid. You might consider, in your particular business, how much in gross revenue needs to be regenerated just to cover what you had to write-off. For example, let’s say your ‘net profit’ is in the 12-15% range, and you just wrote-off a $10K bad debt. You would need to generate about $90K -$100K in new sales just to cover the loss of that write-off. Again, what you write-off are pure profit dollars.
I will give you 2 current examples from our portfolio of accounts; but believe me, I can give you many, many more!
Example #1: a small meat distributor, in this case selling to a small mom & pop store. Back in May 2011, the store bounced 5 checks totaling about $4k. A small payment was made in May toward one of the checks. In spite of this glaring warning sign that there were problems with their cash-flow, the distributor continued to deliver meat for the next 3 months, with no payment whatsoever. The last delivery was in August 2011, and then they finally stopped delivering. Now the distributor was owed $20K! But wait, it gets better. They tried for 1 ½ years to recover the debt from the store before finally placing the account with this agency in February of this year.
Example #2: a small produce wholesaler selling to a mom & pop retail produce store. In April of 2012 they received 3 NSF checks from the store totaling $6700. Nonetheless, without any recovery on the checks, they continued to provide produce to the store through September 2012. Now they were owed over $16K. They finally placed the account with us in January of this year. By that time the store had been taken over by another creditor, who subsequently closed the store, sold the assets and distributed the monies ‘proportionally’.
Our client received $400.
Unfortunately, both believed in ‘false profits’.
I cannot tell you the number of short-sighted business owners, controllers, credit managers, etc., that I’ve spoken to through the years that end up in this situation, often largely due to, (are you ready for this?) they don’t want to pay to have a collection agency do what they are ‘so good at’. I mean God forbid they cut-off a customer early and place with an agency they would have to pay 10-20% to. No, they’ll save their company money by continuing to ‘work with’ the customer, or try to recover on their own for a year, yada, yada..
If I’m sounding sarcastic, it’s because I’m trying to. When you have the advantage of seeing this happen to thousands of businesses for 31 years, I guess you get a little jaded to the same old worn-out, tunnel-vision, excuses coming from some of these credit execs and business owners.
Bottom line, write a credit policy and stick to it. The odds of greater recoveries and less write-offs will be well in your favor. Don’t put your hope in false profits!
Art W Schnitzer
President
The Cash Flow Group, Inc.
Tags: accounts receivable, commercial debt collection industry, Florida, Ft Lauderdale, Miami Fl, The Cash Flow Group
Thursday, May 10th, 2012 | The Cash Flow Group | Comments Off on Top 10 Ways To Improve Payments
Top Ten Ways to Improve Payments
When a company provides a product or service, it has the right to be paid on time. However, anyone who is in business quickly learns that prompt payment doesn’t always occur. Accounts can sometimes become seriously past due or customer checks can bounce when payments are made. Unfortunately, cash flow can be severely impacted by these slow paying customers.
To reduce the number of slow paying accounts, evaluate your current practices and see if they align with the following ten guidelines:
1. Have A Clearly Defined Credit Collection Policy
One major cause of overdue receivables is the lack of a written payment policy that tells your staff and customers when accounts must be paid. Make sure that your company’s terms of payment are clearly stated in writing, to each customer, since uneducated customers often pay late or sometimes not at all.
2. Invoice Promptly and Send Statements Regularly.
If you don’t have a systematic invoicing and billing system, get one. Many times the customer hasn’t paid simply because they haven’t been billed or reminded to pay in a timely manner. This situation regularly occurs in small businesses where there isn’t enough staff.
3. Use “Address Service Requested”
One of the most difficult collection problems is tracking down a customer who has “skipped.” All businesses should be aware of a special service offered by the Post Office. Any statement or correspondence sent out from a business or professional office should have the words “Address Service Requested” printed or stamped on the envelope, just below your return address in the top left corner. If a statement or invoice is sent to a customer who has moved without informing you of his new address and the words “Address Service Requested” appear on the envelope, the Post Office will research this information. If they can locate a change of address on that person, they will send you form #3547 with the correct address (50 cent fee).
This also keeps your address file up to date.
4. Contact Overdue Accounts More Frequently
No law says you can contact a customer only once a month. The old adage “The squeaky wheel gets the grease” has a great deal of merit when it comes to collecting past due accounts. It’s an excellent idea to contact late payers every 10-14 days. Doing so will enable you to diplomatically remind the customer of your terms of payment.
5. Use Your Aging Sheet, Not Your Feelings
Many businesses (or well-meaning people on their staff) have let an account age beyond the point of ever being collected because he or she “felt” the customer would pay eventually. While there certainly are a few isolated cases of unusual situations, the truth is that if you aren’t being paid, someone else is. So stick to your systematic plan of follow up. You’ll soon know who intends to really pay and who doesn’t. You can then take appropriate action once you know where you stand.
6. Make Sure Your Staff is Trained
Even “experienced” staff members can sometimes become jaded when dealing with past due customers. This usually occurs when they have made and broken promises for payment. Make sure the staff is firm, yet courteous when dealing with them. Your collection staff could benefit from customer service training because, in effect, they must “sell” your customers on the idea that you expect to be paid. Make sure that your collection staff is trained to not only bring the account current, but to also maintain good will with them.
7. Admit and Correct Any Mistakes on Your Part
Sometimes customers don’t pay because they feel you’ve made a mistake. If you have, quickly admit it and correct it. Your customer realizes that mistakes can happen in business. Unfortunately, many customers believe that “the owner/president doesn’t need the money.” Denying obvious errors only fuels the fire of resentment your customer may
already feel.
8. Follow the Collection Laws in Your State
In many states, businesses are governed by the same collection laws as collection agencies. For example, calling customers at an odd hour or disclosing to a third party that they owe you money are just a couple of the numerous collection practices that can get you sued. Imagine a person that OWES you money filing a lawsuit against you. If you’re not sure that you are compliant with the law, call your state’s department of finance.
9. Use a Third Party Sooner
If you’ve systematically pursued your past due accounts for 60 to 90 days from the due date, (and they still haven’t paid) you’re being delivered a message by your client. More than likely, you’ve requested payment four to six times in the form of phone calls, letters and statements. Statistics show that after 90 days, the effect of in-house collection efforts are reduced by 80%. That means that the time and financial resources budgeted for collection efforts should be focused within the first 90 days where the bulk of your accounts can and should be collected. From that point on, a third party can motivate a customer to pay in ways you cannot, simply because the demand for payment is coming from
someone other than you.
10. Remember That Nobody Collects Every Account
Even by setting up and adhering to a specific collection plan, there are a few accounts that will never be collected on. By identifying these accounts early you will save yourself and your company a great deal of time and money. Even though a few may slip by, you’ll find that overall the number of slow paying and nonpaying accounts will greatly
diminish, and that’s a victory in itself!
(July 2002 Article from Thomasregister.com)
Tags: accounts receivable, commercial debt collection industry, Florida, Ft Lauderdale, improve payments, Miami Fl, The Cash Flow Group
