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Show Me The Money!

26 Mar

Bringing the money in can seem scary for many.  In truth, unless there is a question of adds or service quality or service timeliness, collections is nothing to fear.  Treat it like you’re making sure there aren’t any outstanding issues.  You’ll never get blindsided and the customer will never get amped up.

I have literally made thousands of collection calls over the years.  The process is very basic.  When they don’t pay, the process needs to be defined and you need to be disciplined about following the process.  Know your process for escalating the issue and don’t compromise the process.  Especially if you are a small business and can’t afford to carry the receivable or worse yet write it off.

Your credit terms will likely be industry specific.  If you’re business doesn’t carry receivables, consider yourself lucky and focus your extra time on marketing and operations.  I am in a made to order business.  This means you are buying something very specific to your needs.

1) For special order items, charge prepayment for smaller orders.  In our case for orders under $500.

2) For orders over the threshhold, charge 1/2 Down, Net COD

3) Collect your COD’s

4) Know your cut-offs – product in versus product out

5) If you can’t get it out, bill it in time for the customer to pay it  when you need it

6) Some positions in an industry can afford offering discounts; match the terms to the need

7) Our position in our industry, provides for Net 10th terms

8) Develop a routine to communicate with your customer

9) Follow it

10) Be the nicest, most focused collection person

11) Don’t be afraid to show up

12) Wife’s can be deal makers or at least force the communication

13) So can collections

14) Realize lack of communication generally doesn’t mean unwilling to pay, but rather unable to pay without a timeline

15) Document every call you make to your customer

16) Know at least 2 contact numbers

17) Google the mailing address to make sure it is not a post office box of some sort.  You want a physical address.

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Controlling Your

26 Mar

Controlling what you pay out to your employees and vendors is one of your most critical activities. Vendors can be a little forgiving. Employees? Not so much. My experience has taken me down a long and winding road.

1) When filling out a credit application, try to avoid signing the personal guarantee.
2) Pay early to get your discounts
3) Pay on-time
4) If you’re falling behind, you need to make some difficult decisions.
a) See revenue
b) See fixed costs
c) See variable costs
d) Prioritizing your vendors
5) The clock can only tick for so long

Cash Flow Ideas

25 Mar

Some cash flow ideas you might consider basic, while others may stir the creative juices.  I’m game for new ideas and your twists.

There are really two different costs to watch, fixed costs and variable costs.

There is revenue to raise.

Bills to pay.

Money to collect.

These all work together in affecting your cash flow.  Ultimately, cash flow boils down to timing cash in with cash out.  Everything else, will influence how easy or difficult this task becomes.

I once had a business owner tell me to make money in the Winter.  Those words have echoed in my brain many a time.  This can prove extremely difficult in a depression for a seasonal industry.  In other words, the industry is shrinking and you can’t tell just how bad the winter will be.  I personally, have found this to be the MOST difficult task to position for and yet believe that ultimately is the most important task to accomplish.

Different industries often have different ways of making money.  In my industry, showrooms and expertise aren’t cheap; which means there is pressure to keep fixed costs high.

A depression environment has forced us to look for ways to push down fixed costs.  With varying degrees of success, there are many ways to lower fixed costs.

1) Let employees go

2) Furlough hours

3) Some states facilitate one week on, one week off – furlough/unemployment

4) Temporary (Winter) layoff

5) Reduce Salary/Wages

6) Use a commission scale to help the business when sales are slow

7) Change management roles to be more directly operational and/or sales (commission based)

8) Close locations

9) Negotiate to reduce your rent

10) Turn down the furnace thermostat

11) Turn off the lights, 10-keys, computers

12) Go digital with as many of your processes as possible

13) Reduce your inventory

14) Reduce your debt

15) Sell assets