Someone once told me an old adage that remains true to this day: ‘Expenses rise to meet income.’
How often to do you or someone you know has asked the question: ‘Where’s the cash?’
It’s a prevalent question with a multitude of answers.
The first things we suggest for people to check are the debtors and ask yourself the following questions:
If the answer is no to any of the above questions, we suggest you apply the ‘If not, why not?’ principle.
Why are they not paying on time?
Is it lack of cash flow on their end? Make contact with them, suggest a payment plan so that they can at least pay it off incrementally/ If they’re repeat offenders, you might consider a stricter credit policy to deter them from taking advantage of you.
Why are we not invoicing regularly enough?
In the technology-driven world we live in, there’s so much software out there that is purportedly designed to assist us in running our businesses, but sometimes issuing an invoice gets pushed down the list of things to do. We encourage you to remember that invoicing is your lifeblood; if your clients aren’t paying you with an invoice, they’re definitely not going to pay if they don’t. Another adage that comes to mind is ‘If you buy a ticket to the lottery you might win. If you don’t buy a ticket, you definitely won’t.’ Don’t let invoicing fall by the way-side, this is an integral part of your business.
Why are they not receiving our invoices?
As mentioned above, many technologies allow us send our invoices by email and one of its features is that it leaves an audit trail, but it is imperative that the invoice not only be generated but actually sent. The longer it takes for you to invoice and send it the client, the longer it will take for you to get paid. You can reduce this ‘lock-up’ period by implementing systems and procedures to ensure that the invoice is created and sent to the client as expediently as possible.
If you need help in developing systems or if you need your debtor procedures analysed, speak to your Proactive accountant today.