Watch Your Cash

By: Ruth King

Cash is the lifeblood of your company.  Without cash, you won’t survive for long.

Here are seven simple cash procedures.

1. When you sign checks, look at them. Never allow a stamp of your signature to be used. You need to see what the checks are for and whether they make sense.
2. Some companies have a policy that two people must sign checks if they are over a certain amount.  However, if you have a stamp of one person’s signature, and the person taking money from the company is an officer, then the two signature requirement is useless.  This is why it’s important that the checkbook be balanced by someone who can’t sign checks.
3. Bill every day and have your payment terms clearly stated on your invoice. When you complete the service or send the product, you’ve completed your responsibilities to the customer.  It’s now the customer’s responsibility to pay your company. If you wait weeks to bill, then the customer thinks that they can take weeks to pay.  You’ve sent a message that money isn’t important to your company.
4. When setting up a new customer, call that customer’s accounts payable department.  Introduce yourself.  Explain that your company just started working with their company.  You want to know the procedure so that you get paid within the agreed upon terms.  What is necessary to process an invoice – a purchase order?  Manager’s signature?  Something else?  Who do you submit the invoice to?  The project manager or the accounting department?  What email address should you use?
5. Assuming you have gotten all the information you need to submit an invoice properly, when you haven’t received payment on the 30^th day.  Make a friendly phone call on the 31^st day.  Inquire when you should receive payment.  Offer to put that invoice on a credit card.
6. If a company is past due and wants more work done, you’re happy to do that work as long as you get payment first.  Take a credit card over the telephone.
7. Every week you should get a report of aged accounts receivables.  Review the report and assign someone to make collection calls.  Follow up on the results.

These are the fastest ways to ensure that you get payment for the work that you’ve done.

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Ruth King is known globally as the “Profitability Master,” and is a a thought leader in entrepreneurship and business. Her books have been recognized as among the greatest in numerous industries. Learn more about all her business activities here.