Small Business Debt Collection and Cash Flow
Effective small business debt collection is one way for a small business to speed up and increase cash flow. Systematic and consistent follow-up is critical for effective credit management and debt collection. Cash flow is the lifeblood of every business.
Small businesses must establish credit terms in the minds of their credit customers. Accurate billing and follow-up increase small business accounts receivable turnover ratios. Educating credit customers, especially new ones, to follow your credit terms, is the first preventative step in small business debt collection.
Every small business should be generating an aged trial balance report on a regular schedule. An aged trial balance, or ATB, lists your credit accounts by balance and age (30/60/90/120 days), showing which accounts are delinquent and require immediate collection. An ATB is critical for effective control of small business debt collection.
Small Business - Debt Collection Tools
Putting a customer's order on credit hold is an excellent way to grab their attention. Immediate contact with your customer in a discreet manner usually delivers the desired message. Contact should be made immediately, and when the customer pays his account, be sure to release any holds. Hence, there are no delays with their next order. Credit holds are a great tool in small business debt collection.
Another great small business debt collection tool is credit screening to filter and identify customers with high credit risk. Credit can be refused, or stiffer credit terms can control risk. Either way, knowing the financial capacity of your customers is one component of intelligent small business debt collection.
AAB can improve your Small Business Debt Collection
Besides standard debt collection, AAB offers a variety of options for small businesses. Risk management, outsourcing, credit information, and accounts receivable training for small businesses are just some of the options we offer.
Let an AAB collection professional help you increase your cash flow. Give us a call or schedule a free consultation on small business debt collection.