15 min
Episode 09: Optimizing Collections and Minimizing Outstanding Balances The Growth Advisor Podcast
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- Management
In today’s episode, I’ll be discussing the optimization of payment collections and how it can significantly impact your business’s cash flow.
As a business owner myself, I understand the importance of timely payments and minimizing outstanding balances. In the two years of running my own business, I’ve faced challenges in this area and made operational changes to ensure smooth payment collection and improved cash flow.
Main Discussion Points:
The twofold goal for collections: Optimizing collections and minimizing outstanding balances.
Background and Credit History Checks:
I recommend conducting background checks and credit history checks on clients to ensure you’re working with reliable individuals or businesses.
Don’t worry about feeling embarrassed or unsure about the process. It can be as simple as doing basic due diligence by checking their online presence, such as a website or active social media profiles.
I suggest utilizing reputable and reasonably priced resources like Sterling and ClearStar for conducting background checks on employees, contractors, and business partners.
Making Payment Easy for Clients:
It’s crucial to make the payment process accessible and timely for your clients.
While I understand concerns about payment processing charges, receiving payments through checks is inefficient in today’s environment.
Subscription services or businesses selling software as a service can benefit from using third-party payment processors like Square, Stripe, or PayPal to streamline billing systems and improve payment collection speed.
For regular payments or long-standing relationships, setting up automatic withdrawals with clients can minimize processing fees and ensure seamless transactions through bank ACH payments.
Minimizing Outstanding Balances:
Even with upfront payments and automated processes, outstanding balances are inevitable. To manage them effectively:
Clearly state the terms and consequences of late payments in your contracts and invoices.
You can charge interest on outstanding balances, but ensure it aligns with acceptable industry practices and clearly communicates it in your contract.
Utilize the automation features provided by billing software to send timely reminders and follow-ups. Customize the frequency based on your payment terms and preferences.
Establish a systematic process for follow-ups, such as sending reminders three days after the payment is due, followed by emails and phone calls if necessary.
Optimizing payment collections is crucial for business success and maintaining a healthy cash flow.
By vetting clients, providing convenient payment options, and automating follow-up procedures, you can improve your chances of receiving timely payments and reducing outstanding balances.
In today’s episode, I’ll be discussing the optimization of payment collections and how it can significantly impact your business’s cash flow.
As a business owner myself, I understand the importance of timely payments and minimizing outstanding balances. In the two years of running my own business, I’ve faced challenges in this area and made operational changes to ensure smooth payment collection and improved cash flow.
Main Discussion Points:
The twofold goal for collections: Optimizing collections and minimizing outstanding balances.
Background and Credit History Checks:
I recommend conducting background checks and credit history checks on clients to ensure you’re working with reliable individuals or businesses.
Don’t worry about feeling embarrassed or unsure about the process. It can be as simple as doing basic due diligence by checking their online presence, such as a website or active social media profiles.
I suggest utilizing reputable and reasonably priced resources like Sterling and ClearStar for conducting background checks on employees, contractors, and business partners.
Making Payment Easy for Clients:
It’s crucial to make the payment process accessible and timely for your clients.
While I understand concerns about payment processing charges, receiving payments through checks is inefficient in today’s environment.
Subscription services or businesses selling software as a service can benefit from using third-party payment processors like Square, Stripe, or PayPal to streamline billing systems and improve payment collection speed.
For regular payments or long-standing relationships, setting up automatic withdrawals with clients can minimize processing fees and ensure seamless transactions through bank ACH payments.
Minimizing Outstanding Balances:
Even with upfront payments and automated processes, outstanding balances are inevitable. To manage them effectively:
Clearly state the terms and consequences of late payments in your contracts and invoices.
You can charge interest on outstanding balances, but ensure it aligns with acceptable industry practices and clearly communicates it in your contract.
Utilize the automation features provided by billing software to send timely reminders and follow-ups. Customize the frequency based on your payment terms and preferences.
Establish a systematic process for follow-ups, such as sending reminders three days after the payment is due, followed by emails and phone calls if necessary.
Optimizing payment collections is crucial for business success and maintaining a healthy cash flow.
By vetting clients, providing convenient payment options, and automating follow-up procedures, you can improve your chances of receiving timely payments and reducing outstanding balances.
15 min