We often commend parents or teachers who “run a tight ship,” but do we truly grasp the significance of this phrase? Its origins goes back to a time when running a tight ship meant the difference between life and death for sailors aboard a wooden vessel, far beyond just maintaining a tidy space. Even in today’s business world, the concept remains relevant.
Entrepreneurs are typically visionaries, focused on the bigger picture. However, to maximize profits, they must establish a well-oiled system that encompasses every aspect, from onboarding new customers to managing payments. Firstly, business owners should carefully consider whether they want to engage with a prospect on open terms. Not every sale is a good sale—only those that are paid promptly and reliably. Conducting a credit check on prospective customers can prevent potential write-offs. Though it may require an initial investment of $20.00 to $40.00, it may save owners from future financial headaches. Once the prospect’s credit is approved, attention must shift to verifying details: Does this prospective customer issue purchase orders or contracts? Where should invoices be sent? Should copies be emailed to accounts payable or left at the loading dock? What information should be referenced on the invoice? Understanding their approval process and payment methods, whether by check or ACH, is vital. Mastering these aspects can be the difference between receiving timely payments or waiting months for payment.
Now that the invoices are accurately delivered, it’s crucial to establish an effective collection strategy. While some companies promptly pay within the terms, others require gentle reminders. A recommended practice is to confirm via email or a phone call that the invoice has been approved and is in line for payment. This proactive approach allows business owners to intervene if the invoice has not yet been processed. If an invoice becomes past due, the business owner must have a predefined collection strategy. In most cases, a polite call or email will suffice to prompt payment. However, if delays persist, it is essential to apply increased pressure on the customer. Although discontinuing future deliveries may be a difficult decision, it may become necessary to reinforce the importance of timely payments.
Establishing clear responsibilities for each step of this process ensures accountability. Having too many individuals involved leads to confusion and a higher chance of misplaced invoices. The roles of the bookkeeper, customer service, and the business owner should be explicitly defined. Once this streamlined process is in place, entrepreneurs can focus on their strengths, confident in the knowledge that they are operating a ship that runs smoothly. By implementing these strategies and maintaining a tight ship, entrepreneurs can navigate the challenges of business operations, improve efficiency, and sail towards success.
Need a fast and easy way to improve your small business cash flow? Invoice factoring could be the answer you’ve been looking for. To receive your free quote call 1-800-297-6652 or complete our quick online application form.
Jack Stieber 972-404-4726 [email protected]
Sarah Fisher 972-404-4726 [email protected]
Brad Gurney 800-297-6652 [email protected]
Julie Adams 800-297-6652 [email protected]
Dakota Stieber 512-339-5112 [email protected]
