Collections

24. February 2010 by admin.

In talking with our small business clients one aspect of their business always seems to rise to top of the ‘needs attention’ list. It is the long debated topic of collections — should I? Shouldn’t I?

The scenario is simple.

I am a small business owner and my cash flow is under strain, so I look to outside resources to resolve the issue. I use my credit cards for business expenses, I slow down my own payments, and I use any available credit facilities to the maximum. I even explore new credit options, a line of credit at my bank, factoring, invoice discounting, what ever I can find.
What I don’t do, naturally, is get on the phone with my customers and ask them to bring their accounts up to date. If I did, my cash flow problems would probably diminish overnight.  When we spoke to some mid-sized companies recently about their payment policy, a number of them openly admitted they deal with their accounts payable when the customer calls and asks for the money. They assume that if they don’t call they don’t need the cash at that time.

With this type of approach it becomes even more important for small business owners to be ever diligent about following up on — what is after all —their money. They are not asking for something as a favor but as a result of them having delivered their goods or services.

At The Interface Financial Group, when we turn current quality accounts receivable into instant cash, we often have to remind our clients that the primary
responsibility for a healthy cash flow is their responsibility — it is not something that you outsource. Interface is there, however, to help with cash flow needs that result in growth situations where other options are not available.

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