Over the years I have met business owners who offer a great product or service but are really struggling with their cash control.
One of the reasons is exemplified by a conversation I had yesterday with just such a business owner. They have no problems finding the right customer and do a fantastic job for these customers.
However, the business owner has a real stumbling block when it comes to invoicing and debt collection. Firstly, they hate the process of invoicing itself – it is a chore they put off as long as possible. Secondly, once the invoices have gone out they are very reluctant to chase for the money owing to them.
In my opinion they are being an April (and every other month of the year) fool.
They are working hard but because they are not following through, and collecting the money owing to them in a timely fashion, they are struggling to pay their bills.
What makes the situation worse is that they have employees they MUST pay every month irrespective of whether the business is paid or not.
There is a clear lesson to learn here – if you are unable, or unwilling, to deal with the discipline of invoicing and debt collection you must find another way of getting these jobs done. If you don’t, you may lose your business.
So what are the alternative approaches you can take?
Firstly, many bookkeepers are more than willing, and able, to take on the invoicing and debt collection roles for you. The benefits of delegation will way out-weigh the costs.
Secondly, you may already have a member of staff on your team who can take on these jobs.
Thirdly, if you really have to do these jobs yourself, you must change the way in which you approach them. Have a very clear procedure detailing exactly how often invoicing should be done (at least once a week would be my recommendation), block out time in your diary every week devoted to invoicing and debt collection, and understand that any work you do for clients is worthless unless you are paid for it!
For extra help with invoicing and debt collection please download the ‘Getting Paid’ guide on my website http://www.fionabevanfinancialmanagement.co.uk/guides.php