For any business, setting up a Policy and Procedures Manual is critical. Accounting and business record-keeping is vital, as it allows for monitoring progress through different time periods. It evaluates budget versus the actual spending, and the records will come in handy when time comes to sell the business. Legal proceedings are also well served by these records.
Aside from record-keeping, businesses are dynamic environments and there are other regular staff interactions with finances in the company. For example, businesses regularly add new clients and suppliers, which involve authorizations on who to accept as a reliable client or supplier. Other business transactions include:
As a creditor, there are always legal options available to collect on your debt. However, depending on the circumstances, these methods can be timely and costly. An alternative is to try and negotiate with the debtor to settle the matter.
Negotiation has many benefits. It saves on time and costs, it is a less aggressive approach and therefore can save on the emotional stress of a legal process, and negotiation typically encourages a quicker resolution.
This article will broadly explore some strategies for negotiating including:
Good financial health is the lifeblood of any business. A healthy cash flow is a great indicator of the wellbeing of your business, but sometimes this can be interrupted by various factors. The most common factor is debtors, and the subsequent risk of bad debts.
Many business owners have a very real and valid fear of debtors. This is certainly not unfounded, but the old adage “prevention is better than a cure” rings true in this case.
The more pre-emptive steps you take to avoid having debtors, the better your business’ cash flow will be, and the more relaxed and focused you can be on running your business.
Here we will outline a few tips to help you debtor-proof your business.
The strategies adopted by a business when collecting debts impact not only on the profitability of the business, but also the brand and reputation of the business.
This article looks at both good and bad debt recovery strategies and when it is best to hand bad debts over to a professional.
Poor debt collection strategies
Poor debt collection strategies fail to recover debts, fail to build relationships with customers, and impact negatively on the image of the creditor business.
Accounts receivable is the most important department in any business, as sales are not sales until payment is received. Late payments not only affect your cash flow, but can also prevent you from paying your own bills on time.
This article looks at ways you can encourage your customers to pay on time, how you can make it easier for them and when you should draw a line and call in the professionals.
10 tips on getting your customers to pay their bills
There will always be customers who do not pay on time, but there are things you can do to encourage the majority to pay you closer to the due date. The following are ten simple ways to reduce the time between issuing the invoice and receiving payment.
Cash flow is the amount of money that comes in and out of a business over a given period of time. While ideally there will always be more cash coming in than is going out, there will inevitably be times when this is not the case and that is why managing cash flow is so important for a business.
This article looks at how to create a cash flow forecast and some of the ways you can manage your cash flow better to ensure the long term health of your business.
How to forecast cash flow
A cash flow forecast is a document that shows the amount of cash a business expects to receive through payments for goods or services and the amount it expects to pay out on monies owed. It is usually a snapshot of a specific period, ideally a week or a month.
The number one reason small businesses fail is insufficient cash flow. The money coming in is less than the money going out, which eventually makes the business insolvent, or unable to pay its debts.
Running your own business requires a basic understanding of finance and this article looks at the need for finance in a small business, where to get it and how to manage it successfully.
Need for finance
When you start your own business, you need startup capital and unless you’ve managed to save it, you’re going to have to borrow it. Small business startup expenses are many and varied and may include:
The key to keeping your business in the black is to have good accounting and bookkeeping practices from the very outset and this article looks at some of the best ways for a small to medium business to stay organised and out of debt.
Have sufficient capital
Many small businesses go under in the first year because they do not take sufficient capital into the business at the start. They take out loans, with the intention of paying them with profits, but if profits do not come immediately, as is often the case, they find themselves with no cash flow and lenders demanding repayment. You need to have enough money to cover running expenses and your own living expenses for the first year at least, or until such time as you can realistically expect to start making a decent profit.
While every business has bad debts, taking the right steps at the right time can mean the difference between full recovery and a loss to the business. This article looks at those steps and your options when attempting to recover bad debts.
What is a bad debt?
A bad debt is an account receivable or amount owed that has not been paid and unless the steps taken to recover it are successful, it will likely be written off as an expense on your income statement. A business will generally factor in a certain percentage of bad debts when estimating earnings.
In many ways marketing and debt collection collection are quite similar. Both entail trying to reach a customer and convince him or her to act. In the case of marketing, it is to purchase a product or service. In the case of debt collection, it is to pay what is rightfully owed.
One of the most effective forms of marketing is known as integrated marketing. This is marketing that transcends any single advertising campaign and goes to the very core of a company’s identity. It is marketing that integrates every aspect of a business, from the way it treats its customers at each touch point, to the internal culture of the company itself, which is reflected in the way its employees dress, speak, think and act.