Who Owes Me Money? Debt Recovery
Cashflow is as much about money in as it is money out.
All too often our bookkeeping team hear clients say,
“What’s happening? If my business is showing such a high profit, how come I have no money in the bank?”
“Where is it? I have even had to invest funds into the business over the past few months.”
And all too often business owners work hard and tirelessly and feel they never have much money in the account. One of the most important aspects of bookkeeping is not only creating invoices to customers on a regular basis, but also requesting payment for those invoices.
Cashflow is king!
Without good cashflow, a successful business can fail because owners can’t purchase supplies, pay workers or meet their tax obligations quarterly. Something business owners forget is that the job isn’t complete until the money is in the bank account.
Many business owners believe that once they have invoiced the job, it’s complete, their loyal customers will pay and generally they do, eventually. Unfortunately, “eventually” doesn’t aid good cash flow.
Some business owners don’t have a process for invoicing when the job is complete, in those cases, there is barely any cash flow at all, the work they’ve done is more like a donation.
You wouldn’t do your work for free. Getting paid is important.
A client came to us, very concerned. He was very busy, and he was invoicing as the job was done. He was getting lots of new customers and had many repeat customers. He just had no money in the bank.
He had staff and every week he was extremely stressed that he wouldn’t be able to pay them, they were good staff and he didn’t want them to miss out on what they were owed. He forgot that he was good at the service he provided, and his customers should be paying him in a timely fashion also.
We discussed his processes and we arranged an EFTPOS machine at the shop so his customers could pay as they left. For the work he did which required accounts, we emailed him a list of outstanding amounts and if he had time, he would call customers to request payment or we would call the customers for him. We added his bank details to the invoices and created a regular call to chase outstanding debts.
His cash flow improved.
Now on payday, he is no longer stressed about how he can afford to pay wages and his suppliers. He can even draw a wage for himself, instead of constantly tipping funds into the account to top it up. Our client has become more successful and is relaxed and confident that his cash flow now meets the needs of his business.