Turning on the Cash Faucet – Accounts Receivable

March 16, 2010 at 3:27 pm Leave a comment

I do the work, send an invoice and expect to get paid.  That sounds fair to me.

Sometimes it just doesn’t work that way.  For whatever reason, the cheque doesn’t arrive in the mail the next day.  That’s when a process for AR is needed.  I’m going to tell you the textbook way to do it and you can adjust in a way that makes sense for you.

  1. Make an agreement with your client about what work you are to do, how much it will cost them and how and when you want to be paid.
  2. Do the work that your client wants and deliver the outcome they have requested.
  3. Make a formal ask for the payment, reiterating the agreed upon terms.  That means send an invoice that states, again, how and when you expect to be paid.
  4. Follow up to make sure your client is happy and is prepared to pay on time.
  5. If they don’t pay as agreed upon, have a letter (or email or phone script) ready and get in touch right away.
  6. When a client can’t make a payment, make arrangements then make it clear that these arrangements are special circumstances and will not be repeated.
  7. Stop working with your client until their past work is paid up.  You can use some discretion here, but beware of letting them get in over their heads.
  8. Make regular contact with your client until the bill is paid in full.

I do most of these things, but I admit reluctance to push too hard and it has cost me.  I work to create a rapport with my clients because many are treading into an area that is uncomfortable for them, so to take a hard line when the money is due feels like a betrayal.  Having said that, I can see where my ‘kindness’ has just created a deeper hole for some and enabled them to carry on when they shouldn’t have.

I keep telling myself I have a responsibility to model the appropriate professional business behaviour.

Entry filed under: 3. Do It. Tags: , .

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The Three Success Factors

I have worked closely with 100’s of business owners and I have seen too many struggle. I have seen what works and what doesn't.

It takes 3 things to succeed:
1. Hard work - and I know you do that already.
2. Knowledge - domain knowledge: you've got that and continue to learn; and business knowledge: this is where everyone focuses and it's easy to find
3. Mindset - This is the killer app. This is what makes or breaks small business owners.

We work on Mindset here at the Business Owners Success Club: how you think about yourself and your business.

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