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5 Sure-Fire Ways to Reduce Your Debtors

5 Sure-Fire Ways to Reduce Your Debtors


Out of control debtors can be detrimental to business. The main reason that many businesses fail is due to a lack of cash rather than weak sales. It’s critical that systems are put in place while the business is running smoothly, rather than waiting until you’re in trouble. If you follow these simple rules, you can do this in a cheap yet efficient manner.

1. Make it easy to get paid

Invoices and statements should clearly show all of the information necessary to make it easy for your clients to pay you.

  • Send invoices as soon as possible, instead of waiting until the end of the month. This ensures you don’t miss your customers’ payment cycles, and you get paid quicker too.
  • Display the due date by the invoice total
  • Show payment methods and offering as many payment options as possible
  • On statements, show ageing as “current” and “overdue”. Using 30, 60 and 90 day terms encourages late payment
  • Find out exactly who should be receiving the invoice and sending it to direct to them so that it doesn’t get lost

2. Follow up

Businesses often have their own policies which can delay payment processes. Some pay the “squeaky wheel” first.  While you may feel like a nag, a strict routine around overdue accounts is very important. The best way for employees to approach the matter is to make sure they are friendly and non-threatening when speaking to customers.

3. Clear payment terms

Though common sense, you’ll be surprised how many businesses do not include their payment terms on invoices. Your payment terms make it clear to the customer when the invoice needs to be paid by. If you leave this off the invoice, they may assume it’s not urgent and just pay it in their own time. Keep payment terms as short as possible.

4. Get staff involved

It’s essential for your employees to take part in the process. You could offer incentives for reductions in debtors days. Ensure your accounts team track the cashflow and own the debt-collection process. All new customers need to be credit worthy and checked that their accounts are paid when due.

5. Go digital

Online systems have many benefits. They allow you to keep track of your communications with debtors, minimising errors, email invoices and statements and be able to locate paperwork quickly and efficiently.

Do you have a debtor strategy that you can share? Did any of the above tactics work for you?

 

Top 5 Tips to Manage Your Business Finances, Without Going Broke.

Do you want to learn how to read you business numbers and get you “financial” act together?  Our Top 5 Tips guide will also show you the 5 essential reports every business owner needs to find the hidden profits in your business.

My name is Amanda and I’m the founder of ProfitSmarts.

Being good at what you do is no longer enough. Your long term survival odds are very slim if you don’t understand and manage the numbers in your business.

But when you get business right, the results are simply amazing.

Amanda Dyason, Founder of ProfitSmarts

We help Australian business owners increase profits, accelerate cash flow and master their financial management. We believe life is too short and precious to be stuck in an under performing business delivering mediocre results.

ProfitSmarts gives you more Profits and consistent Cash flow, putting you back in Control. Because when you get business right, the results are simply amazing.

7 Simple Strategies to Move Your Business Systems into the 21st Century

7 Simple Strategies to Move Your Business Systems into the 21st Century

 

Over the past twenty years, I have had the privilege of working with some fantastic businesses. As a supplier or customer, you just know when a business is destined to be great. You can feel the passion from every employee who are on the shared mission to make the business great.

On the other hand, I intuitively know when an organisation is past its use by / sell by date. You can sense that no one cares, or if they did once, they have long since given up.

So what are my seven simple strategies to move your business systems into the 21st century?

1. Stop all manual data entry: Data should flow into your business from sources such as:

  • Bank data feeds
  • Data feeds from other suppliers
  • Website including online forms

There should be no manual data entry. Your marketing and sales processes should be designed so that your prospects and customers happily do the data entry for you.

2. Stop re-keying data: This is where you already have the data – such as name and contact details – but the data is in some systems and not others. Your data should flow seamlessly between your different systems including your:

  • Website platform
  • CRM
  • Email marketing system
  • Marketing automation platform
  • Bookkeeping and accounting system
  • Point-of-sale system
  • eCommerce system
  • Inventory system
  • Workflow system
  • Proposal system

It’s important to make sure your systems “talk” to each other and the information transfers easily between systems. Consider a service like Zapier if your systems do not talk to each other.

3. Use off-site data backups: Having your data in the ‘Cloud” just makes sense. Cloud-based Software-as-a-Service (SaaS) providers do more frequent, more reliable and more secure data backups than your business will ever do. Storing data locally on your own servers and laptop/computers is risky. Floods, storms, theft, fires, earthquakes. They happen more often than you think.

4. Stop time-consuming staff training: Do you show staff how to do everything through one-to-one training, or you find yourself re-explaining processes and procedures? Set up a company wiki (internal website), and use videos and screencasts to train your staff. Wikis are easy to create. Try Google Sites, it’s free. Videos and screencasts are easy to record using apps such as Snagit and Screencast-O-Matic.

5. Stop manual invoicing: When people buy from you, the invoicing process should be 100% automated. It is not time efficient to create it, PDF it, email it to the client and then store it in your digital filing system. Your accounting and eCommerce system will have various ways to achieve this automation.

6. Automate your debt collection: Let people know when their payment is due and when it is just past due. These reminders can be automated via email, SMS and voicemail messages. Apps like Debtor Daddy and EzyCollect make this automation possible.

7. Learn how to manage your cash flow: Glancing at your bank statement every now and then is not cash flow management. Unfortunately, this is how many small business owners assess their cash position. Cash flow needs to be managed on a regular basis.  You need to take into account known future inflows and known future outflows, such as payroll, rent, supplier payments as well as tax and compliance-related payments.

In these modern days, there is software which makes it much easier to pull in the data you need, enabling you to manage your cashflow efficiently and predict – and then head off – any potential cashflow crunches in the coming months.

While the terms ‘cloud’ and ‘paperless’ and are both quite abstract, there a couple of things that I need to point out about these terms. It’s not about the lack of paper or the IT servers being ‘in the cloud’. That’s just a feature. It’s all about the efficiencies, data flows and knowledge sharing that they provide. Those are the real benefits.

 

Top 5 Tips to Manage Your Business Finances, Without Going Broke.

Do you want to learn how to read you business numbers and get you “financial” act together?  Our Top 5 Tips guide will also show you the 5 essential reports every business owner needs to find the hidden profits in your business.

My name is Amanda and I’m the founder of ProfitSmarts.

Being good at what you do is no longer enough. Your long term survival odds are very slim if you don’t understand and manage the numbers in your business.

But when you get business right, the results are simply amazing.

Amanda Dyason, Founder of ProfitSmarts

We help Australian business owners increase profits, accelerate cash flow and master their financial management. We believe life is too short and precious to be stuck in an under performing business delivering mediocre results.

ProfitSmarts gives you more Profits and consistent Cash flow, putting you back in Control. Because when you get business right, the results are simply amazing.

Overwhelmed by Your Business? 3 Strategies to Get Your Groove Back

Overwhelmed by Your Business? 3 Strategies to Get Your Groove Back

3 simple strategies to get your groove back

Being a small business owner can be lonely. You’re often on your own, controlling your own ship. Some people function well in this environment. But others struggle when there’s no one to bounce ideas off.

Regardless of which one you are, there’s one thing I’m sure about. To have a more fulfilling existence, you need to love what you are doing.

Find your ‘why’

Simon Sinek is well known for speaking about the importance of understanding why you do what you do. Sinek believes that people do not buy what you do; they buy why you do it. He also says that if you want to attract the right employees and customers, you must convey your ‘why’ to them.

Very few business owners truly understand why they do what they do, or what gets them out of bed in the morning. When you sit down and seriously think about it, it will often be about more than making money.

When I ask this question at workshops, I usually get responses like:

  • To provide a high standard of living for my family
  • To help customers
  • To solve problems
  • To make a difference
  • To do something worthwhile in my community
  • To challenge my brain

Whatever it is that drives you, it needs to be crystal clear to you and be expressed in everything you do.

Get things done – get an accountability buddy

The feeling of not achieving at work, not doing what you said you were going to do, can suck your joy. Einstein explained it by saying: The definition of insanity is doing the same thing over and over again and expecting a different result.

An accountability buddy is an excellent way to force implementation. Someone to whom you make commitments, on a weekly or monthly basis.

Your buddy must be someone you respect and trust. They need to be able to give you harsh feedback and haul you over the coals to you focused again. You can do this in three ways:

  • Join or create a mastermind group. These are quite common, and you will likely find one in your area. Before you join, do some research. You need to find a group that will challenge you and hold you accountable but which also has people who can teach you new skills. If you can’t find a suitable group, think of three or four successful business owners who you respect and approach them to discuss the idea. ProfitSmarts runs Masterminds as part of their coaching programs.
  • If a larger group does not appeal to you, then pick one person. Perhaps you know of another small business owner with similar frustrations to you. Respect for this person will see both of you benefit from two-way accountability.
  • Find a trusted advisor to hold you accountable. They can help you work out why you are off track and what you need to focus on to achieve your targets.

Put yourself first

One of the reasons you went into business was to have control over your time. To be able to do your own thing, spend more time with your family or take more time off. Sadly, too many small business owners become so involved in business ‘busy work’ that they end up creating another job for themselves. Just because you are a business owner, it doesn’t mean you need to work 24/7, 365 days a year.

You need to grasp the concept that real wealth is how much discretionary time you have. Though money can buy happiness, what’s the point if you have no time to spend it?

If working too many hours is your big problem, start by blocking out half a day per week when you do not work. It’s your business, so it’s your rules. Then work your way up to block out a decent amount of holidays a year in advance. If you have young children, block out the 10 weeks of school holidays. I don’t always take the whole 10 weeks, but nothing significant is scheduled during that time, so I can choose whether to take them or not.

If you think this is impossible for you to do, then I can guarantee that nothing will change until you try it.

As you increase your time from half a day per week to 10 weeks a year, systemise your business so that it is no longer dependant on you. I promise that you will find yourself having much more fun.

 

Top 5 Tips to Manage Your Business Finances, Without Going Broke.

Do you want to learn how to read you business numbers and get you “financial” act together?  Our Top 5 Tips guide will also show you the 5 essential reports every business owner needs to find the hidden profits in your business.

My name is Amanda and I’m the founder of ProfitSmarts.

Being good at what you do is no longer enough. Your long term survival odds are very slim if you don’t understand and manage the numbers in your business.

But when you get business right, the results are simply amazing.

Amanda Dyason, Founder of ProfitSmarts

We help Australian business owners increase profits, accelerate cash flow and master their financial management. We believe life is too short and precious to be stuck in an under performing business delivering mediocre results.

ProfitSmarts gives you more Profits and consistent Cash flow, putting you back in Control. Because when you get business right, the results are simply amazing.

How to Overcome the 3 Most Common Challenges Faced By Every Small Business Owner

How to Overcome the 3 Most Common Challenges Faced By Every Small Business Owner

 

Running a small business is tough.

Often competition is from larger, often better funded operators. And finding time to work ON your business, rather than IN your business, can be a real challenge.

As an international consultant, I have noticed three challenges that many small business owners face. They are:

  • Most small business owners fail to plan. I’m sure most clients spend more time planning their holidays than planning their business. In planning sessions with clients, I often hear that it is the first time they have set aside specific time to think about their business. The planning enables them to gain focus, direction and have something to aim for, which allows them to step up within their business.
  • Many small business owners find it hard to understand their numbers. The reason I wrote my book, Building Profits the Smart Way, is that (not surprisingly!) many small business owners are not very good with their numbers, and they need help to learn these skills to create real value in their business. This often starts with a business performance review and helping them put together an action plan for the next 12 months.
  • Small business owners often do not have anyone to talk things through with. We know that accountability gets things done, so it is vital to have an independent, unreasonable friend to keep you on track.

By addressing these challenges, any small business can develop a valuable competitive advantage. It never ceases to amaze me how business performance can be transformed. It’s as simple as figuring out where you are going, putting some clear measurements in place to show your performance and building accountability into your day-to-day processes.

It doesn’t matter if you are a manufacturer, a retailer, a builder, a winemaker or even a large corporate company. These principles apply to any business, and with discipline and focus, they will make a positive impact.

Decisions + Actions = Results

Take action – you’ll be glad you did.

 

Top 5 Tips to Manage Your Business Finances, Without Going Broke.

Do you want to learn how to read you business numbers and get you “financial” act together?  Our Top 5 Tips guide will also show you the 5 essential reports every business owner needs to find the hidden profits in your business.

My name is Amanda and I’m the founder of ProfitSmarts.

Being good at what you do is no longer enough. Your long term survival odds are very slim if you don’t understand and manage the numbers in your business.

But when you get business right, the results are simply amazing.

Amanda Dyason, Founder of ProfitSmarts

We help Australian business owners increase profits, accelerate cash flow and master their financial management. We believe life is too short and precious to be stuck in an under performing business delivering mediocre results.

ProfitSmarts gives you more Profits and consistent Cash flow, putting you back in Control. Because when you get business right, the results are simply amazing.

Show Me The Money – 4 Simple Strategies to Keep Track of Cash on a Regular Basis

Show Me The Money – 4 Simple Strategies to Keep Track of Cash on a Regular Basis

 

“Where did all of the cash in my business go?”

I’ve lost count of the number of times I heard from clients.

At a recent workshop, I asked the business owners in the audience if they ever had the thought “I can see a profit on the profit and loss account, but where has the cash gone?” and almost 100% of hands went up.

And a recent ASIC report cited cash flow management as a leading cause of business failure.

So, what can you do to keep track of your cash on a regular basis? At a minimum, you should put together a cashflow forecast by month and better yet, by week. At the end of each month (or week) compare the forecast to actual cash and compare your bank balance to your forecast. If your forecast is out of sync with your actuals, you need to find out why.

Some things you can check include:

  • Is your profit below target? If yes, how can you increase sales or reduce costs (without impacting your customer service or sales and marketing capability)?
  • Are customers taking longer to pay you? Do you need to put in place a more rigorous collections system?
  • Is inventory blowing out? If yes, do you have an inventory management system, or could you benefit from implementing one?
  • Is the business short of working capital? If yes, have you drawn out excessive amounts of cash?

The key to effective cash flow management is to design a system that makes sense to you, the business owner. Regularly review it to ensure you manage your business and, ultimately, your cash flow.

For you to do this, your information needs to be in a format that you, the owner, can easily understand. I am a big believer of presenting your financials visually.

The move towards cloud technology is another way to help business owners to keep track of their cash. Most cloud accounting packages have bank feeds. This means you can log in each morning and instantly see your cash position displayed in graphical format.

You should then be able to drill down and see what is causing significant movements. With the ability to track actual versus budgeted performance in real time, you are much better placed to take fast action when things go wrong.

But cloud accounting and bank feeds are not the complete answer.

Small businesses are nimble, able to make quicker decisions and often innovative. But the biggest challenge lies in the ability to understand and interpret the critical numbers in your business.

It’s not your ability to have the numbers. It’s all about your ability to understand the numbers and interpret them.

Business intelligence and technology are essential for small business owners to understand and explain what is really going on. And when you actually ‘get’ it, your cash flow worries will start to become a thing of the past.

Top 5 Tips to Manage Your Business Finances, Without Going Broke.

Do you want to learn how to read you business numbers and get you “financial” act together?  Our Top 5 Tips guide will also show you the 5 essential reports every business owner needs to find the hidden profits in your business.

My name is Amanda and I’m the founder of ProfitSmarts.

Being good at what you do is no longer enough. Your long term survival odds are very slim if you don’t understand and manage the numbers in your business.

But when you get business right, the results are simply amazing.

Amanda Dyason, Founder of ProfitSmarts

We help Australian business owners increase profits, accelerate cash flow and master their financial management. We believe life is too short and precious to be stuck in an under performing business delivering mediocre results.

ProfitSmarts gives you more Profits and consistent Cash flow, putting you back in Control. Because when you get business right, the results are simply amazing.