Business owners offer their insights and advice on how to manage your accounts and help maximize your profits.
Whatever the motivation is that led you to become an entrepreneur, from abandoning the threat of corporate downsizing and layoffs to a longstanding personal drive to be your own boss from an early age, there are certain practical matters that must be well-addressed, from the very beginning, if you want to start off strongly and continue with the best chance at a rewarding and profitable tenure at the helm of your new venture. It may not sound exciting to read about managing your accounts, but if you think about it, we are talking about the lifeblood of your business: your profit. Profit is exciting isn’t it?
So, managing accounts need not be seen as a tedious chore, but rather an exciting part of the mission to build an efficient system that helps keep receivables from growing and instead rewards you with prosperous growth in your bank account.
First, establish strong accounts through personalized customer service
Dan Murias, owner of Minuteman Press in Red Deer, Alberta, Canada, advises new business owners on the best practices for a range of needs, from promoting their businesses to managing accounts well in terms of nurturing personal relationships with clients. He knows that by making clients feel as if you are partnered with them in a meaningful way, the loyalty it generates can positively effect a lot of areas, including how those clients come through in terms of meeting their financial obligations to you when it is time. Dan shares, “Managing accounts is one of the most important keys to long term relationships. It’s a really old saying, treat people the way you would want to be treated. It is true. Don’t be frugal with re-runs, when that client comes in to get hockey programs for his kids’ team, do them at cost. Always think of the bigger picture. I write discounted jobs for clients’ personal use into my books as marketing/advertising expenses. The little things you do for a client goes a long way. Take them out for lunch once in a while, the more personal you make your relationships, the stronger they get.”
Making sense of your books from day one
Never put yourself in the position of wondering where your invoices, bank statements and other financial documents are. Incomplete records are a product of habits that produce chaos over time, so make sure everything is in place and put in the effort to keep it that way. Computerized records further ensure that accounting records won’t be lost in a variety of unplanned circumstances, including fire damage. Back-ups (off premises) provide extra security and peace of mind.
As you start marketing your business with the assistance of marketing specialists able to help design, print and promote you as your business starts to expand, be cautious so that the average number of days that invoices are outstanding doesn’t mushroom over time along with your healthy growth. Maintain a sharp eye on the cash that is due to come in and make it your mission to see that it does. The last thing you need is bad debts, so apply discipline and consistency to avoid them.
Johan Barnard, owns and operates a successful Minuteman Press franchise in Nelspruit, South Africa. He reminds new business owners to consider the need to properly manage “debtors”, but also “creditors”. Johan learned from his experience that proper account management and staying on top of cash flow can be all the difference between a business that remains stagnant and a business that thrives. He explains, “No sale is done till the money is in the bank. We nearly lost our business because we managed our debtors badly. Once we started focusing on the debtors, our cash-flow became positive. Being in control of your creditors is equally important. Should you know that you are going to run into cash-flow difficulties, speak to the supplier, immediately. Build long term relationships with the supplier – this will help should you encounter any problems. Also, utilize suppliers to gain information on competitors that have the potential to be taken over.”
In terms of accounts receivable, there seem to be 3 common problems that can become costly to you in a very short period of time if you do not anticipate them and they are short pays, payment beyond agreed terms and finally, clients that fail to pay at all due to economic difficulties. Of course, if you are being “short-changed” by a short paying client, you are not gaining your full worth on that account and a client that elects to pay beyond agreed terms is going to trip-up your cash flow and possibly force you to borrow money to maintain your financial demands. And, of course, if you have a client completely failing to pay, then you lose not just the money connected to providing the products or services but also the profit potential associated with the sale. All are no good!
Fortunately, there are accounting software packages that can create reports which break down your accounts receivable by preset time intervals and in detail. This way, you can quickly determine which accounts are beyond agreed terms and focus on those delinquent accounts on days when you don’t have a great deal of with which to work on collections. Some of these packages can apply finance charges to delinquent accounts and that can help offset the cost of those who pay beyond terms. Plus, the addition of late fees is sometimes all it takes to motivate clients to pay on time. They begin to realize you are serious when it hits them in the wallet and you can be spared a lot of problems.
Gerhard, Miemie and Daantjie Snyman, successful owners of Minuteman Press in Hatfield, South Africa offer 5 tips on managing your accounts for greater ease as you go forward into building your business:
1. Keep an eye on your cash flow and sales on a daily basis – know what is going on in your business – keep your finger on the pulse!
2. Get deposits wherever possible and ensure that customers (especially new ones) do not leave the store without full payment or proper arrangements
3. Follow up on outstanding invoices on a weekly basis, and, of course take into consideration the arrangements made with each
4. Change the payment terms of “bad payers” to full payment up front – if they do not accept that it is probably better to lose them as customer
5. Again, pay suppliers on time as arranged
Your accounts are like gold, so treat them that way
Rich Panowitz, Regional Vice President in Houston for Minuteman Press International, advises business owners that it is indeed worth it to attend to a growing customer base on a personal level while addressing the issue of collections with a system that makes sense and can be managed consistently. He illustrates this point by sharing how he helps the franchise owners within his region start off with the greatest chance for success as they learn to manage their own accounts.
Rich explains, “One thing I tell new Minuteman Press owners is, treat your accounts like they are gold. Getting the ball rolling and growing your customer base is key to the start-up of any business. We want to partner with our customers to help their business develop. I’ve seen small jobs come in the door that turn into top customers. Building a rapport with your customer can lead to great things.”
While you cannot force your clients to pay their bills, you can take advice from more experienced business owners and experts to help you manage your accounts with efficiency. By instilling a sense of loyalty in your clients through excellent personalized customer service from the beginning, your business relationships with them can lend itself to greater ease when it comes to effective receivables management.
Managing your accounts in a way that makes sense for you and keeps outstanding balances down requires a “controls and discipline system” as well as the desire to maintain order for your greater sanity as well as the chance for healthier profit. Never forget that the energy you put into what some may see as a tedious chore over time is actually tending to the lifeblood of your business. Therefore, managing your accounts with a degree of excitement is certainly justified as it is directly related to your ultimate goal of building a rewarding entrepreneurial experience.
Looking for more business tips and advice? Find your local Minuteman Press design, marketing and printing franchise at www.minutemanpress.com.
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