Plymouth, NH (PressExposure) January 11, 2010 -- The easiest way for a business to make more money without selling more products or gaining new customers is to collect money more efficiently from current customers. "If you do only one thing to make your cash flow better, do this," says Michelle Dunn, author of Ultimate Credit and Collections Handbook (Entrepreneur Press, $29.95, ISBN: 1-599180-251). "Every small business must have a credit policy in place to be successful. This ensures the business owner--and not the customers--controls the success of the business," she said.
Offering credit can increase sales, but when goods or services go out before payment comes in, the business is at risk. Dunn offers tips to help keep payments flowing smoothly and minimize the risks.
â¢ Make sure collection letters are strong and action-oriented. Change them frequently if they're not getting the desired results. â¢ Discourage changes in payment terms. Too many payment plans or changed payment terms can impair a business's cash flow. â¢ When a client makes a payment, follow up immediately with a letter or phone call. Thank them for their payment and inform them what their new balance is and where and when to send the next payment. â¢ Always send payment envelopes with collection letters. Tell customers exactly what to do, e.g., "Pay now." â¢ On larger accounts, call or send a reminder as soon as an account becomes past due. â¢ Ask to speak to a manager or owner when making collection calls, rather than speaking to a gatekeeper or secretary. Go right for the decision maker. â¢ If a customer disputes the quality or price of goods or services, attempt to resolve this immediately. Insist that they pay the portion of the bill they are not disputing while the disputed portion is worked out. â¢ If all else fails, refer the account to an outside collection agency.
Maintain a steady cash flow by offering clear, consistent guidelines for payment and staying on top of every account. With these tips and others found in Ultimate Credit and Collections Handbook, businesses can minimize the risks and maximize the benefits of providing credit to their customers.