Small Business (corporate events) Advice: Improve Your Accounts Receivable Collection Cycle Now
No commentsBy Laurie O’Neil
Almost any small business can use advice on how to improve its collection cycle. The first line of defense against late payments is a complete invoice. Your bills should be accurate, detailed and easy to understand. If difficult to understand, then your client will need to call for additional information. That translates into “you have been added to their to-do list,” which increases the time of your collection cycle. Include on each invoice:
- Your company’s contact information: name, address, tax id number, phone and contact person
- The date the invoice was prepared
- The customer’s name and address
- A description of the goods or services sold to the customer - itemize, if possible (An itemized bill is harder to contest.)
- The amount due, with sales tax amount broken out
- When the invoice is due
Once prepared, send invoices promptly. Another piece of small business advice is the longer you take to bill a customer the less likely you are to receive payment for the goods and services provided.
Many of my business mentoring clients are surprised to learn that the step requiring the most amount of time in the cash conversion process is the time it takes to collect on a customer account. The cash conversion process begins the moment they make contact with the customer, and ends when they have received and deposited payment from that customer; hopefully this cycle repeats itself each month.
The time it takes my business mentoring clients to collect their accounts receivable is measured by the average accounts receivable collection period. The average accounts receivable collection period is an important indicator for determining when their business will be paid for the goods and services it provides.
This simple calculation gives you a powerful tracking tool that helps you adjust your cash in-flow on an as-needed basis:
Step 1: Calculate your average collection period by dividing your total sales for the previous year by 365. This gives you your average daily sales volume.
(Total Sales / 365 Days = Average Daily Sales Volume)
Step 2: Then divide your average daily sales volume into your current accounts receivable balance to get the number of days it takes to collect a bill.
(Average Accounts Receivable Collection Period = Average Daily Sales Volume / Current Accounts Receivable Balance)
Now that you know your average accounts receivable collection period, you then need to interpret that number as it relates to your business by asking four important bookkeeping service questions.
Bookkeeping Service Question #1: Is your average accounts receivable collection period in line with the company’s credit policy? If your credit terms provide your customers with 30 days to pay their bills, then you should expect that your average collection period will be somewhere around 30 days - maybe a little longer. If your average collection period is 60 days then you need to examine other factors that affect billing.
Bookkeeping Service Question #2: Are you billing your customers consistently? Look at your Accounts Receivable Aging Report, the report that summarizes all of your outstanding invoices by client and number of days outstanding. Are the outstanding invoices on that report related to products and services sold within the last 45 days, or are they related to products and services you provided three months ago and just got around to billing? Create a procedure to bill customers once a week or each time you have a completed sale.
Bookkeeping Service Question #3: Are you billing your customers effectively? Are your customers calling you with questions about your invoice? Perhaps you didn’t have that important upfront conversation with your client about how you charge for your products and services. By having this conversation, confusion and anxiety over wondering if the customer is going to pay you can be eliminated.
Bookkeeping Service Question #4: Are you tracking overdue accounts and taking consistent action to collect past due accounts? Do you have an effective tool in place to track when an account comes due, and knowing who has paid their bills and who has not? When a customer’s invoice goes past its due date, is there a procedure in place to follow-up with that customer? Sometimes sending customer statements and making friendly reminder calls is all it takes.
By answering these four basic questions, implementing a few bookkeeping service procedures and heeding this small business advice, you’ll soon be running a fine-tuned collection machine.
Laurie O’Neil is the co-founder of The Bookkeeper’s Referral Network Inc., the place where business meets great bookkeepers. To get your copy of The 9 Disastrous Mistakes Most Freelance Bookkeeper’s Make in
Business (and How You Can Avoid Them!) visit http://www.bkpr-network.com
QxBid New Car Shopping Online Auctions
By auctionsdir
Once you have decided how much money you are willing to spend, you are ready to start looking at automobiles. Dont go to the dealership just yet. Consider the features you most want in your new vehicle. Look at cars on the internet and read some new car magazines. Keep a list of a few cars that interest you most.
Free Online Auctions
Before you Visit the Dealership:
Obtain a copy of your credit report. Knowing your credit score will help you when its time to get the loan. Your credit score will affect the type of loan you can get and the interest payments you will pay. If your credit isnt great, dont worry. Unless you have had a recent bankruptcy, you are likely to get a loan. You just may end up paying a higher interest rate.
If your credit is decent, consider securing financing before you start shopping. Banks, credit unions and other loan sources all offer this service. Applying for your loan in advance gives you buying power and decreases the chance that they will play games with your payment. In addition, the best rates are not always available through the dealership. Having your financing before you visit the dealer helps you avoid some of the haggling.
Know the value of your trade in vehicle. Kelly Blue Book is available online and can give you a good idea about the range you can expect to get on your trade. On the website, you will be asked questions about the mileage and condition of the vehicle to help determine the value. Always trade your car when it is in decent running condition. That way you wont feel like you must rush to buy a car. Rushing to buy because your car is about to die can result in you getting a bad deal on your new vehicle.
There are a few times during the year that are better for car shopping than others. Consider shopping during the Christmas holidays. Few people buy a vehicle at this time of the year. As a result, the dealerships are nearly empty. Since some dealers are trying to break their end of the year sales records, you may get a good deal. Another good time is the late summer or early fall. Dealers are making room for the next years model and often are motivated to get rid of this years left over models.
Online Auctions
If you have your heart set on a particular model, color or features, call the dealership before you visit. Be sure the dealer has the model you want. Sometimes a dealer will offer to get the one you want from another dealer. Dont do this. You may end up paying additional costs for towing. In some cases, when the vehicle arrives, it may not be exactly what you want. To avoid these issues, deal directly with the dealer that has the car on the lot.
Tips for Dealing with the Dealer:
Visiting a dealership and negotiating with the salesman is a situation that most people find unpleasant and stressful. Being prepared will help you get the most for your money and be satisfied with your experience.
Start by paying attention to your appearance. Shower and dress casually, but in nice clothing. You will be treated better than the person who shows up in torn jeans and an old T shirt. Bring a loan calculator with you and print outs of prices from the internet and ads from other dealerships. If they know you have been doing your research, they are more likely to treat you with respect.
Know what the dealer is paying for the car. You can find information on dealers cost, rebates and incentives by visiting new car buying websites online. Take some time to research the vehicle you are interested in purchasing. The more you know, the better prepared you will be to negotiate. Even some so called no haggle dealerships will negotiate with you. If not, leave and visit another dealer.
Dont buy based only on the monthly payments. You may end up paying more. Concentrate on the cost of the vehicle rather than the monthly payment. Check the price to be sure all rebates are included. Some dealers will offer a discount but will fail to mention that rebates are included in the cost. This is not really a deal.
You will sometimes be given a choice between a rebate and a lower interest rate. The better choice depends on the price and term of the loan. This is where your loan calculator will come into play. Do the math and compare the monthly payments with each option to determine which is best for you.
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I highly recommend visiting here for more info about cars
Keys to Small Business Success
By James Finnila
According to the US Small Business Association 2/3 small businesses are out of business within 2 years and from those remaining only 44% survive the next 2! This is a dire statistic for those considering starting their own company and perhaps a necessary reminder to the uninitiated or uncommitted.
In some cases and for some people betting your entire investment on one hand of cards might statistically give you a better chance of getting ahead. But, you’re not going to make the same mistakes that the majority of small business owners make, are you?
What are those mistakes?
And what are the keys that give the top 14% who make it the winning edge?
Mistakes to Avoid
While there are a number of mistakes that can cost you your business some are easier to avoid than others. Natural disasters and, to some degree, economic factors may be beyond your ability to avoid and apart from insurance there may be no point in preparing contingency plans for them. So what are the pitfalls that you can avoid?
Lack of vision, goals and planning
The essential building blocks for your business must be a vision or mission and an accompanying set of goals and plans. Plan your work, then work your plan is a popular saying amongst successful business managers. These winning leaders know that prior consideration of the business and its environment is the key to future success. This doesn’t have to be complex or even detailed to be successful. You could have a living, flexible plan that allows for your personal preference and style. This is okay, provided something is prepared before you start out and written down so that you can refer to it and measure progress and actions against it. Then schedule regular reviews of your goals and actual performance.
Insufficient cash flow
Without cash your business will grind to a crashing halt overnight and you’ll find yourself and your business on the wrong side of the statistics and in the back of the unemployment queue. You simply must have money. That is not to say that making a profit is necessary, particularly in the first few years as your business establishes itself, but the cash to meet monthly expenses is vital. Failing here is probably an extension of a failure in your planning and review (see above), but equally it could be a result of simply failing to collect the money owed to you or to be too lenient on customers or staff (fraud is a very big problem - plan for it!)
Expanding too slowly
The market is a massive place today, particularly with the simplicity of the internet. Businesses are competing not only with local rivals, but also with interstate and overseas companies big and small and with family run or home based business using auction sites like eBay to sell items at prices that the average ‘bricks-and-mortar’ business with large overheads could profit from. Margins are very small in this environment and so the key to success is now expansion. You will stand a much better chance of winning the war if you have troops on the ground in a number of places (so to speak). Consider franchising if you are not comfortable taking on a number of offices or stores or get good advice and mentoring from someone who has done it before. It’s really necessary, despite the complexity involved.
Insufficient/inappropriate investment
Do you own your own business? Chances are that if you are still small you have put most of the funds in yourself. What should you invest it in to get the most value for those precious dollars? Certainly you’ll need plant and equipment to get you going, but don’t be afraid to invest in quality technology and in training and promotion as well. We are living in a vastly different age now than ever before. Technology is at the forefront of global commerce and you need to be hooked into it just to survive. Of course there is no need to go overboard, but you simply must be mobile, fast and able to store and process data quickly and accurately. Training and promotion are likewise necessary for your staff and opportunity to drive and navigate the information superhighway successfully.
Poor business and/or management skills
Chances are that you are not good at everything (even if, like me, you like to think that you are). You may be a whiz at technology, or great with people, or have a nose for a deal or the head for negotiation. Whatever your skill set is you should work to your strengths and try to develop your weaknesses, but while in time you may improve in some of those, you may not do it quick enough to save your business from the 85% destined to failure. Get people on board that complement your strengths and you’ll find yourself in a much better position to guide your company forward successfully and really listen to what those who know better than you have to say!
Keys to Success
If you can avoid the mistakes listed above you have half the battle won. Now, take no prisoners. Pump up your attitude and get your mind around the idea that you are going to be one of the successful ones. This can take some practice and mental conditioning coaches, positive friends and family members and mentors are going to help you get yourself thinking better if you make it a habit to consult with them. Arm yourself with motivation and with people that will remind you why you are in business and what you want to get done. Get in contact with mentors or take on partners who can guide you and a team that will support you.
Being a small business owner is a difficult road and one that will require not only iron-clad commitment and unshakable determination, but great sacrifice, often of personal and family money and time. Be sure to be appreciative of any people who you love who have to give up something they value to support your ambitions. Keep your health up and eat well, don’t skip meals or exercise and get some refreshment in the form of entertainment or recreation now and again so that you can keep at it for the long run.
Oh, and keep your eye out for a little bit of good old fashioned luck!
With these things in mind you are in a position to be able to make it, and remember that despite the grim statistics many, many businesses do. Yours will be one of them and you will be able to achieve your dreams and ambitions if you stay true.
And stay out of casinos!
James Finnila is a successful online business owner and author who has helped hundreds of people start and succeed in online business. Subscribe to his daily newsletter to find out more. Go to: www.eBaySuperSelling.com
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