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sannwood 31st August 2006 10:43 AM

Correcting Negative Cash Flow
 
Came across an article discussing the improvement of cash flow for home based businesses. It prompted me to become curious about the collection methods and payment terms home based business owners are using. . .and whether or not there tend to be problems collecting money owed?

Quote:

If you’ve completed the work as agreed, they have no reason to delay payment, unless you put overly lenient payment terms on your invoice. For example, if you write “Net 30,” start asking for “Net 10.” Instead of waiting until the end of the month to collect, send an invoice as soon as your work is complete.
What payment terms do you find work best when providing a service or selling a product from a home based business?

And more interestingly, has anyone had to implement methods of collection or possibly even consider using a third party collection agency for slow paying customers?

Correcting Negative Cash Flow

TheIntroducer 1st September 2006 03:55 AM

Third party collection eats into your margin.

There are different types of incoming cash flow management. [a] Your terms in days [b] offering settlement discount (e.g. pay in 10 days and we give you 2.5% off the invoice amount [c] imposing a credit limit (if they have a balance of say £500, they can't re-order.

But I think the golden rule of controlling debtors is "KEEP ON TOP OF IT".

Set yourself aside a few hours each week, on the same day and at the same time and make telephone calls to people who are over their terms. No one likes doing it, particularly if you are calling 'good' customers, but I find it the most effective way

Good Luck


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