Business owners and managers seek value an ROI.
They are right. It is the best way to grow the business.
Any sales proposition will include an estimated ROI calculation. This way, you the business manager can make an informed decision. You are going to invest some dollars in next project, what are you getting in return?
How about infinite ROI? If you invest nothing and get something… that’s an infinite return
Before you spend resources on what’s out there, you should check what you already have and how to turn this into profits.
Before spending on marketing, check if you can reach out to your clients for referrals.
Same goes for hiring new employees.
But what about the most obvious thing out there? Collecting payments that are due to your business.
The fact you made a sale and have sent an invoice to the client doesn’t mean money in the bank.
In fact, only 50% of the invoices are paid on time. Half (!) of the invoices go overdue. 15% aren’t paid even 90 days past due. Over 2% aren’t paid at all.
Good news is, that you can improve your stats and get some money in the bank with a minimal effort.
Most business doesn’t even have a collections policy. They follow up with a client once in a while. That’s if they have time and nothing better to do, or if they have $0 in their bank – which is too late.
First, define your terms. Let your clients know. Stating them on the contract, invoice or both would be great. Make sure to add payment instructions to make it easy for them to pay you.
Second, make sure that you actually check if you have been paid. With everything going on it might be hard to keep up, but at the end of the day, you work to get paid, otherwise, it would be your hobby.
You can set a reminder and review the state of your receivables once a week or as needed. Or, delegate it to your employees. Make sure to outline all past due accounts and contact them regarding their outstanding invoices. This step alone will get a large portion of these invoices paid.
By improving your collections process and practices you can get something for nothing (which is rare). You will get this cash boost for your business without the effort of acquiring more clients and taking on extra projects.