Small Business enterprise Assistance: Strengthen Your Accounts ...

Recessions ; Depressions The federal government defines ?recession? narrowly as a period of two consecutive quarters of declining gross national product, or GNP.

Pockets Of Stability During tough economic times look for pockets of stability and counter-cyclical trends. Auto repair businesses often grow during tough times.

University enrollments often grow during recessions. Similarly, people may scale down vacation travel plans. Recessions are scary and people feel uncertain about the future. Entrepreneurs facing tough times may question their own self-worth. Avoid raising prices during a recession, even if your own costs are rising. Offer clients alternative payment options. Extend credit terms. Accept smaller monthly payments, but insist on a regular payment schedule. If you are having trouble paying your own bills, re-negotiate with creditors.

Contingency Plans Could you stay in business if your income went down 10%? 25%? 35%?

Marketing In Tough Times If you market consistently, you?re likely to survive a recession stronger than you went into it.

Recession Marketing For Small Businesses and Independent Professionals

Almost any small business can use advice on how to improve its collection cycle.

• The date the invoice was prepared
• The customer?s name and address
• A description of the goods or services sold to the customer ? itemize, if possible (An itemized bill is harder to contest.)
• The amount due, with sales tax amount broken out
• When the invoice is due

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Many of my business mentoring clients are surprised to learn that the step requiring the most amount of time in the cash conversion process is the time it takes to collect on a customer account.

The time it takes my business mentoring clients to collect their accounts receivable is measured by the average accounts receivable collection period. The average accounts receivable collection period is an important indicator for determining when their business will be paid for the goods and services it provides.

(Total Sales / 365 Days = Average Daily Sales Volume)

(Average Accounts Receivable Collection Period = Average Daily Sales Volume / Current Accounts Receivable Balance)

Bookkeeping Service Question #1: Is your average accounts receivable collection period in line with the company?s credit policy? If your average collection period is 60 days then you need to examine other factors that affect billing.

Bookkeeping Service Question #2: Are you billing your customers consistently? Create a procedure to bill customers once a week or each time you have a completed sale.

Bookkeeping Service Question #3: Are you billing your customers effectively? Are your customers calling you with questions about your invoice?

Bookkeeping Service Question #4: Are you tracking overdue accounts and taking consistent action to collect past due accounts?

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Source: http://www.ccmie.com/small-business-enterprise-assistance-strengthen-your-accounts-receivable-collection-cycle-now

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