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How to reduce your accounts receivables

rangerfs — Tue, 31 May 2011 16:10:44 +0000

If you are a small business that sells to other businesses, you face a unique challenge that your B2C counterparts do not face: While B2C businesses usually receive payment for their products or services up-front, you have to deliver your products or services, bill for them, and then wait to be paid.

That can be a problem because you need cash flow right now… NOT 30-to-90 days later when your business customer gets around to paying you! And that’s IF they pay you at all. Let’s face it: Sometimes your customers don’t quite feel obliged to pay.

So how can you ensure that you get paid for the goods and services you deliver? Here are a few tips for you:

For completely new customers, require a full payment up-front. They should earn your trust before you extend them any credit. For your existing customers, get paid up-front. If you can’t get the full amount up-front, at least get your customer to pay part of their invoice. Require a down-payment from your customers and then offer them good terms.

Don’t give the customers on your accounts receivables list any excuse: Create flawless invoices and send them regularly. Keep accurate records. Be diligent and consistent. This will help ensure that your business’ receivables are collected.

Get involved in your customers’ lives and businesses. Get to know the owners. Help them. Cheer on their kids at their little league game. The reason that people in “the olden days” extended credit to each other without requiring a credit check was because they knew each other so well.

When your customers do owe you money, be firm. Require the money before you provide any more services. Don’t continue to extend credit.

Train all of your staff to understand how your accounts receivables work and to be able to collect them flawlessly while providing great customer service.

Lastly, don’t be afraid to send them to a debt collection specialist. Businesses resist doing that because they don’t want to harm the good relationship or the potential for future business. However, you need to remember that it is YOUR money that the customer owes you and their refusal to pay is akin to theft. If they wanted your product or service, they should be expected to pay for it. A debt collection specialist can help to recover that debt and might even surprise you by keeping the relationship with the customer intact.

Ranger Financial Services

214-206-8060

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Run a successful business with these financial reports

rangerfs — Tue, 03 May 2011 16:46:20 +0000

Business owners need to keep a tab on what’s going on in their companies. They can peer over the shoulders of their employees (which isn’t always helpful and is usually called “micromanaging”) or they can keep their finger on the pulse of the business through regular reports. In this article, we’ll look at a few reports that business owners should have. These reports can be generated weekly or monthly, whatever is more helpful to the business owner.

Income statement: The income statement is a document that shows how much money has come in over a period of time from various sources (usually from customers) and what money has been paid out over the same period of time (which can include payroll, payments made to vendors and suppliers, rent, utilities, etc.). The bottom line number is the profitability of the company during the period.

Balance sheet: The balance sheet is a document that shows how much the company is worth, overall. It compares the company’s assets (things it owns) to its liabilities (things it owes) for a bottom line number that values the worth of the company. Most accounts receivables are usually considered assets (which may surprise some people) because that money is theoretically collectable and is close to cash-on-hand.

Cash flow statement: The cash flow statement is a document that shows the movement of money over a period of time. This might include payments coming in from various customers and payments going out to various vendors and suppliers.

Accounts receivables list: The accounts receivables document is a list of customers who owe money to the business. The accounts receivables list should be ordered by date, since newer transactions are more likely to be collected than older transactions. Older transactions can be identified and sent to a debt recovery specialist or collection agency to assist in collection.

Inventory list: The inventory document lists the cost and retail value of each item in inventory, along with how many of each kind of item and their ages. Ideally, businesses have very little inventory (high turnover), which helps to maintain a healthy cash flow.

While the first three reports are the most important financial reports, the other two financial reports (the accounts receivables list and the inventory list) are also critical to ensuring a business remains healthy.

Ranger Financial Services

214-206-8060

Find Ranger at the following

Economic Implications of Japan

rangerfs — Wed, 27 Apr 2011 21:26:41 +0000

In mid-March, 2011, everything changed for Japan. They were hit with an earthquake of a magnitude that had not been experienced before. Then a massive tsunami followed that washed miles inshore, devastating entire towns and obliterating infrastructure. After that came a crisis from nuclear power plants that had been damaged by the first two disasters. All tolled, thousand are estimated to be dead, thousands upon thousands are displaced, and millions of people are affected.

So, what were the economic implications of this “trifecta” of disasters?

The immediate economic effects of Japan’s disasters

There are immediate economic implications from this situation: When disaster strikes, prices of basic necessities (like food, water, first aid supplies, and flashlights) tend to rise. This isn’t because an unscrupulous storeowner is trying to cash in; it’s because prices rise according to demand and scarcity, and in a disaster situation, demand is high and these products are scarce.

Adding complication to the matter, people will be short of cash in the early days until they can access their savings. They often have just whatever cash they could grab in the short time they had before disaster struck.

The medium-term economic effects of Japan’s disasters

In the medium term citizens will be short of cash because their jobs are affected. Those particularly affected will be anyone who did not have a lot of savings to begin with. (Meanwhile, citizens are still paying debt on things they own but no longer possess). As well, it will cost money to return to their homes, clean up, and replace what has destroyed. Yes, some will have insurance to reimburse them, but even that requires money up-front before they receive the check.

The long-term economic effects of Japan’s disasters

In the long term, Japan will struggle… for many years to come. Their economy was already precarious before the disasters (they languished for decades in a recession-like economy). Now, the government is selling billions (some news sources are even saying trillions) of dollars in bonds to pay for repairs to infrastructure. These repairs will create jobs, but repayment of those bonds comes out of taxes… from cash-strapped people who need the jobs. Doubtlessly, other countries will step in to help Japan.

Japan will recover eventually, but it has a long road ahead of it.

Ranger Financial Services

214-206-8060

Find Ranger at the following

Interview With an Account Receivables Professional

rangerfs — Wed, 20 Apr 2011 19:12:26 +0000

Sometimes the best way to succeed is to hear from someone else has already succeeded in the same industry. In this article, we’ll talk to an account receivables professional — someone who has been in the debt recovery industry for years and has collected thousands upon thousands of dollars.

We asked: What kind of debt recovery do you do?

The accounts receivables pro answered: Although my work includes some consumer debt recovery, most of it is commercial debt recovery. Over the years, I’ve collected thousands of dollars from the sale of goods or services to businesses.

We asked: So what tips can you give to readers who are also in B2B collections?

The accounts receivables pro answered: The first thing to do is to be consistent. Each account you need to collect from must to be touched regularly. You need to remain on their minds and remind them that you are not going away. If you miss touching base with someone — and I have, especially when I was new to commercial debt recovery — the possibility of collecting diminishes.

We asked: Is there anything else that diminishes the likelihood of payment?

The accounts receivables pro answered: Yes; time. With every passing day, the likelihood of debt recovery decreases. So the best advice I can give is to collect as early as possible, even if it means collecting less.

We asked: Should a commercial debt recovery professional always be willing to collect less?

The accounts receivables pro answered: No, but you should be willing to negotiate. Listen to the customer. If they tell you they can’t pay, then work with them and negotiate — perhaps lower payments spread over a longer term will be a feasible payment option.

We asked: Any advice for newbies?

The accounts receivables pro answered: Yes! When I first started, one of the things I would do on a call was to apologize for the hassle. Then I realized that was a mistake. Don’t be apologetic, it’s your money! Call with the expectation that they should pay you. It changes the call.

We asked: Any last advice before we wrap up so you can get back to your debt collections calls?

The accounts receivables pro answered: Just one more thing: Be firm yet friendly. Those aren’t opposites. You can be both at the same time. However, it they aren’t willing to work with you, don’t be afraid to move them to a commercial debt recovery specialist.

Ranger Financial Services

214-206-8060

Find Ranger at the following

Add Value With Your Finance or Accounting Department

rangerfs — Mon, 18 Apr 2011 18:49:27 +0000

When we think of various departments within the organization, we tend to divide them up into two groups — those that add value and those that support the groups that add value. The sales, marketing, and manufacturing departments are often the value-adding departments that people think of. And departments like warehousing, administration, and HR are the ones that people think support the value-adding departments. Frequently, the Finance or Accounting Department is one of those groups.

However, the Finance or Accounting Department can play a far more valuable role. Here’s how:

First, train your sales staff on how to do accounts receivables. When frontline staff better understand the accounts receivables, and when they can actively participate in their collection, more money can be collected.

Businesses resist this because they don’t want to take sales staff away from sales. However, this group frequently has the best relationship with the customer. By collecting accounts receivables, the sales staff are not just contributing to sales, they are contributing to cash flow and profitability.

Second, the Accounting department can keep up to date records and share them with everyone.

Information is invaluable and should be shared among the organization. If there is a customer who has not paid their bill, the other departments should know — perhaps they can help. As well, this also helps to address issues of customers who pay an accounts receivable to a low-level employee in a different department. That employee won’t know what to do unless told.

Third, the Finance department can rework your reward system to reflect the importance of cash flow and accounts receivables.

The Finance Department can add value to the organization by adjusting the remuneration system so that commission-based sales employees are no longer paid only on sales but on money collected (I.e. Payment is made on sales minus accounts receivables). This keeps sales staff mindful of better qualification of customers and makes them a bigger part of the customer’s purchase cycle.

The Finance or Accounting department is often thought of as one that supports the value-adding departments. However, this department can add value by enabling improved cash flow through better-managed accounts receivables.

Ranger Financial Services

214-206-8060

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Economic Implications of China

rangerfs — Wed, 13 Apr 2011 21:28:02 +0000

China’s economy is just cooking right now! In spite of a political position which most Americans would call “oppressive”, China’s massive population is birthing a massive middle class, which is helping to prop up the global economy.

To help support this burgeoning middle class, China is no longer exporting as much of the metals and raw materials it once exported. Rather, it has started to import more and more raw materials. These raw materials help to build the infrastructure that the middle class requires. (This infrastructure includes roads, cities, power and water utilities, and it also includes the many products that the middle class can now afford).

A huge populace suddenly spending more sounds good… but is it? What are the economic implications for the rest of the world? Here are a few of those implications:

China’s rising economic stature will indeed help to prop up the global economy. For the most part, this is a very good thing.

However, producers of goods and services might find it more lucrative to sell into China than to supply the needs of other nations. This could leave a product or service deficit outside of China, which will result in higher prices. A high risk factor is food – where North Americans could potentially export a majority of their foodstuffs to China, leaving North Americans to pay higher prices for food.

In addition to that, a current worldwide shortage of natural resources (including uranium and other minerals, particularly rare earths, which are used in portable electronics) will drive up prices of energy and consumer goods, because what little is available is being sent to China.

While the rest of the world is “licking its wounds” from the recent economic catastrophe, China is rising up as an economic power. It provides an exciting prospect of opportunity to the rest of the world to serve this new and very large market, but it can also result in higher prices almost across the board in products and services that many people take for granted.

So, what should you do? If you run a business, you have two opportunities: First, start building relationships and making inroads into China. It could be a huge economic frontier for your business. And second, shore up your local customer base and extend in-continent because – over the long term – these customers will continue to want to buy from you.

Ranger Financial Services

214-206-8060

Find Ranger at the following

Little-known accounts receivables tips for starting a healthy business

rangerfs — Tue, 12 Apr 2011 20:40:51 +0000

Every entrepreneur wants to start and grow a healthy business – one that produces improving profitability for the long-term. But how does an entrepreneur start out on the right foot? In this article, you’ll read about little-known accounts receivables tips to start a healthy business.

Healthy business tip #1: Start with good habits – Minimize your receivables by asking for the money up-front, and even by providing a discount if customers pay early. Charge increasingly higher percentages of interest the farther out a customer pays. This will help to ensure that more customers pay up-front. Some may pay with a corporate credit card, and some will even bring a check with them when they come in to make the purchase!

Healthy business tip #2: Qualify your customers – Offering to bill your customers is basically extending them credit. But most small businesses won’t do a full credit check on their customers. But you don’t have to do a full credit check to feel comfortable with extending credit to your customers. If customers have to bill, put basic qualification processes in place. For example, take five minutes and investigate the company. How long have they been in business? Are they local? Do they have a physical address? Is the company’s “official phone number” merely a cell phone? Is there someone answering the phone? These aren’t going to be foolproof, but they can help you identify potential challenges.

Healthy business tip #3: Send out invoices right away – If you do choose to bill customers, don’t wait and do a “batch run” of invoices at the end of the month. Send out the invoice on the same day as the purchase. This can add as much as 3 weeks to your collection efforts and time is of the essence when collecting.

Healthy business tip #4: Plan to succeed – Put a plan in place to start following up consistently and constantly with the businesses on your accounts receivables list. Prepare telephone scripts, mail-outs, reminders, and emails carefully so that you don’t have to “reinvent the wheel” with every customer.

Almost every business will incur some accounts receivables (especially if your business sells to commercial clients). However, those accounts receivables don’t have to hurt your business if you follow these four healthy business tips!

Ranger Financial Services

214-206-8060

Find Ranger at the following

A critical component to business success

rangerfs — Thu, 07 Apr 2011 19:42:55 +0000

Businesses need a number of things to survive, but the most important thing that businesses need is consistent and growing profitability. This allows them to reinvest in themselves and it gives the owner a reward to run the business. Without it, a business is literally a “non-profit” entity.

But do you know the second most important thing a business needs?

The answer is not income, nor is it inventory, nor is it a strong team. It’s not even happy customers. Of course those things are important but the most important thing is cash flow.

Cash flow is the speed and consistency of incoming money. Think of it like water coming out of your faucet: The water is income… Do you want an occasional drip or a steady stream? Of course you want a steady stream. You want money moving through your business like a faucet of water with plenty of force! That’s healthy cash flow.

Cash flow keeps bills paid and employees happy and inventory available. Without it, a business may not always be able to pay expenses on time, thereby disrupting other aspects of business. Even if your profit is only minimal, a healthy cash flow can make all the difference between success and failure of a business.

So, how do you ensure that you have good cash flow? The secret is in managing your accounts receivables. When customers buy something from you, but don’t immediately pay, they are added to your accounts receivables list and you try to collect from them later. Minimizing the number of people who are added to your list, plus minimizing the amount of time they are on your list ensures that your business has adequate cash flow. There are many techniques and tools to do this.

You will also reach a point in the life of each individual receivable where one of three things needs to happen: It needs to be deleted because it was collected; it needs to be expired as uncollectable; or it needs to be sent to a commercial debt recovery specialist to escalate it. Although the preference is, of course, to collect everything, that’s not always possible. A debt recovery specialist might be the solution if you do not want to expire the account receivable.

With good structures in place, you’ll collect many of your accounts receivables. And with a commercial debt recovery specialist on your side, you’ll help to cover the riskier accounts receivables, too.

Ranger Financial Services

214-206-8060

Find Ranger at the following