When you are busy running your own business, things have a tendency at times to slip through the cracks.
While you certainly do not purposely go out of your way to make mistakes, it is all but inevitable that some things will occur, leaving you to have to scramble to right the ship.
One of the biggest things to keep your eyes open for is missed customer payments.
Even though most customers will pay their bills in a timely manner, some will miss the deadline dates, be it by accident or perhaps even on purpose. When this happens, what do you do to make sure your cash flow is not severely impacted?
If you’ve been having some issues to date with customers skipping out on payments, make sure you fix that issue sooner rather than later.
Put Contingency Plans in Place
First and foremost, making sure you have a contingency plan ready to roll out if some customers do not pay you for the purchased goods and/or services is something you can’t overlook.
While some business owners will turn to collection agencies if they’re getting nowhere with customers, others have opted for invoice factoring companies.
For those not aware, the latter are those companies that will take on your unpaid accounts receivables, in turn giving you money to cover your business expenses etc. Those business expenses are obviously higher when you have some customers failing to pay you in a timely manner or even at all for that matter.
As you may end up finding out, factoring companies can be the solution in many instances, giving business owners a way out from running into potential debt when customers renege on paying.
If you opt for looking into invoice factoring companies, take some time and effort to research the ones available to you.
Your biggest concerns should be locating one that has not only been around the business for a number of years, but also offers first-rate service.
You can turn to the Internet to research such companies, starting by doing a simple Google search of these types of businesses.
Review Your Business Actions
Once you have an invoice factoring company working with you, the next step is to look at how you got in this predicament in the first place.
Among the areas to review:
- Invoicing – For starters, review your invoicing process, looking to see if there are any holes you have been missing. Are you getting the bills out on time (for those customers not paying in-person at a physical store location or through your online store)? If you are lagging when it comes to sending out invoices on a regular basis, you are in fact partially guilty of the problem you may find you and your business in;
- Follow-up – With all that both you and customers have going on in your lives; it can become easy for one or both to become distracted. That said make sure you have a reliable follow-up system in place so that you and your customers know the dates of invoices going out and when they are expected to be paid. If customers do not pay by the given deadline, it is important that you follow up with a notice (and second billing statement). If you find yourself sending out more than two statements, then it is time to consider alternative actions to get your required money;
- Rainy day fund – Finally, it never hurts to review your rainy day fund, making sure it has some substance to it. Although running a business requires you to shell out a fair amount of money for supplies, advertising, office space rent etc. you should still do your best to have some finances (for business purposes) put away if you need in a pinch.
To become or stay a successful entrepreneur, you need to have many things fall into place.
Right up at the top of the list is making sure your finances do not get out of whack, especially from some customers dropping the ball with timely payments.
At the end of the day, are you cashing in on timely customer payments or are you left holding the bag?