Could you use more cash for your business? The answer for most businesses is "Yes!" But then the next thought would be "How? How and where can I get more cash for my business, for myself, without borrowing or making unwanted cuts?" You will be surprised where this money can come from. It is right under your nose, and Cybertary can help you get it!
As a business owner you are familiar with the term, accounting procedures. To some, accounting procedures may not seem very important, but to the professionals at Cybertary, proper accounting procedures can greatly improve your bottom line. One of the top ways to bring the cash you earned into your pocket is by improving the collections of your Accounts Receivable (A/R).
Let's take a look at a business example and see how Cybertary can help. A service company has an average of $200,000 in A/R on a monthly basis and needs help. We took a look at their accounts receivable procedures and aging report (a QuickBooks report) to get a better understanding of their situation. Next we ran an analysis of their A/R with our high performance accounting analysis software. The ratios that were calculated and compared to the industry showed us that the company needed to reduce their average days collection.
The data and new procedures we generate can help reduce A/R within a few months. Imagine collecting just half of your outstanding A/R within a few months! There is a lot you can do to start this process.
Take a look at your business accounting procedures and improve them with these tips.
- Reduce the collection cycle. Look at customer accounts that are past due. Take action on them now - do not wait until next month.
- Create or tighten your credit policy. Do you check your customer's credit? Do you have a process to approve customers? Are standards in place to extend a customer's credit?
- You can shorten your credit terms. Instead of offering terms of net 45, offer net 30. Or you can offer a discount to pay with even shorter terms. For example, offer a 1% discount if the invoice is paid within 10 days. This kind of offer can be very appealing to many companies and minimize your accounts receivable exposure.
- Tighten up your invoice procedure. Invoice your customers as soon as your services or products are rendered. You can also fax or email your invoices to customers. By invoicing immediately instead of at the end of the month, you can reduce your day's receivable by up to 15 days or more.
- Quality control. Review invoices before they are sent out to your customers. Many companies won't pay invoices that have errors on them. Some may not even bring the errors to your attention, until you call to collect the money. A quick quality check will save you time and money.
- Properly trained accounts receivable staff. Whether you have a designated A/R employee or you take care of this yourself, it is important that the person responsible for A/R is properly trained to manage a large and important part of your business. It is important to train them to properly read A/R reports and know how to use the analytical information Cybetary can provide.
Small efficient changes to accounting procedures can go a long way, and help you reach your financial goals. By implementing these tips and taking advantage of Cybertary's financial software you can increase your cash flow in a short amount of time.
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