A Business Survival Secret
In these turbulent economic times, it is imperative that business owners seek and embrace ideas to save money. One expenditure-reduction secret hinges on this often over-looked principle: the way a business collects money may be an integral factor in how much money that business collects. By devising an advantageous accounts-receivable system, owners pave the way for favorable cash flow.
How can business owners collect money due (to them) in quicker, cheaper and more effective ways?
Cash flow is crucial to a business’s vitality. One of the primary reasons any given enterprise fails may be attributed to cash flow problems where expenses outpace revenues. Future returns cannot offset present day expenditures. Thus, by maximizing revenues, by instituting a method where a company collects payments in a more timely, efficient manner–cash flow becomes more favorable and concomitant business success appears more likely.
The operative question arises: “How can business owners collect money due (to them) in quicker, cheaper and more effective ways?” Companies specializing in outstanding payment services can implement services immediately and serve as a means of keeping owners’ prices competitive while preserving profits–a rare combination for today’s business establishments. The following provides a glimpse of several exciting accounts receivable services:
Checks by Phone: This service is especially ideal for owners whose business has a mail order component. Payment is secured via the telephone upon the customer’s authorization and deposited into the owner’s account within 48 hours. A phone checks system offers a distinct advantage over credit card processing: tremendous cost savings (as high discount/transaction fees do not exist).
Online Electronic Checks: Here, an owner may easily accept and process electronic check payments directly on his/her website. It takes less than two days for the funds to be transferred to the owner’s account (a much shorter duration than a paper check). Again, credit card expenditures are avoided as the potential number of clients increase. In addition, “impulse” purchases are more likely to occur.
Automated payments: Various companies have the software to produce bank drafts for businesses that expect to receive payments on a recurring (e.g., monthly) and/or nonrecurring basis. These drafts collect customers’ payments using automatic bank deductions from their checking accounts. Paper drafts are delivered to the owner on their due date. For larger businesses, payments may be processed through the ACH system. Using an automated payment system, owners need not worry about late payments and unnecessary time and labor costs.
Electronic check conversion: Paper checks are handled in much the same manner as credit cards where the owner receives payment within two days. A check is scanned and, like a credit card, is converted to an electronic item at the point of sale. Conversion machines may come equipped with verification (to ensure that a potential customer is not listed on a negative database of individuals who have previously bounced checks) and technology to electronically collect that “falls through the loop” NSF check. Research indicates that about 18 billion point-of-sale checks are written every year in the United States and a business can increase its profit potential 30% by accepting checks.
MSIQ can perform a detailed and honest black & white numbers analysis to add efficiency to your costs
Credit Cards: Ultimately, a business owner must still include this option, as this may be the preferred method of payment by customers. Retailers must be aware, as many credit card carriers overcharge for equipment and quote unreasonable discount and transaction rates. In addition, subtle fees may come into play that cause “cash flow paralysis.” An owner must perform due diligence when contracting with credit card carriers, taking price and quality of customer service into account. Contrary to popular opinion, banks are usually not the best resource.
Substantial profits may be obtained by knowing how to cut expenses and optimize efficiency. A vibrant and healthy accounts receivable system saves more than money; indeed, it just may save the enterprise! MSIQ can perform a detailed and honest black & white numbers analysis of your current rates, or setup low rates for those businesses that do not yet accept credit card payments.
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