In this podcast episode, Gene Marks delves into the challenges small businesses face in collecting accounts receivables and provides practical strategies to expedite the process. With the average timeframe for receivables ranging from 45 to 60 days, Gene shares five tips to enhance collections and improve cash flow.
Podcast Highlights:
- Average Accounts Receivables Timeframe:
- The standard timeframe for accounts receivables is 45 to 60 days, highlighting the extended period businesses often wait for payment.
- Five Tips for Increasing Collections:
- Check Credit Before Committing: Conduct credit checks on new customers, especially for significant deals, to assess their payment history and reliability.
- Take Deposits Upfront: Encourage upfront payments or deposits, mitigating the risk of non-payment and providing immediate working capital.
- Allow Credit Cards: Accept credit card payments, despite associated fees, to secure quicker payments and streamline the receivables process.
- Leverage Technology: Utilize accounting systems and CRM tools to automate reminders, alerts, and follow-ups, ensuring timely communication and action on outstanding invoices.
- Consider Factoring: Explore factoring services for larger invoices, allowing businesses to sell invoices to a third party for a fee, obtaining immediate funds while the third party handles collection.
- Transcript Highlights:
- Gene emphasizes the importance of proactive measures in credit management, urging businesses to check credit before entering deals.
- Taking deposits upfront or utilizing block billing for services can enhance cash flow and reduce the impact of delayed payments.
- Accepting credit cards, despite fees, offers the advantage of immediate payment, with Gene suggesting strategies to cover associated costs.
- Leveraging technology, such as automated reminders and CRM systems, streamlines the collections process, ensuring timely follow-ups and communication.
- Gene introduces factoring as a viable option for businesses dealing with slow-paying customers, enabling the sale of invoices for quicker funds.
Conclusion:
The podcast provides valuable insights for small businesses seeking effective strategies to accelerate accounts receivables collections. By implementing these actionable tips, businesses can enhance cash flow, minimize the impact of delayed payments, and establish proactive measures for credit management.
Note: The podcast transcript is presented in summary form, capturing key highlights and recommendations. For the full details and context, it is recommended to listen to the complete podcast episode.
5 Ways You Can Increase Your Accounts Receivable Collections (thehartford.com)
