GETTING PAID: B. Basic Collections Practice

Maximizing Cash In: The Healthy Heart of Business

BY Robert B. Kanyamanza

This section looks at three ways to maximize cash from sales in a business.

The first is fairly straightforward: grow revenues through all the product development, sales and marketing expertise you can master. Making sales is just the first step in the right direction.
The cash management perspective focuses on the two subsequent steps on maximizing “cash in”: making sure costumers pay you (collecting your receivables) and turning those cheques and transfers into cash in your bank account (converting cash as quickly as possible).

CASH FLOW MANAGEMENT
1. GETTING PAID

Bad debt and late payment can turn even good months into liquidity struggles. Receivables collection is one of the most common actions in cash management, so it is a good place to start.

2. Basic Collections Practices

ROBERTKA Business Solutions receivable specialists recommend a 20-day cycle, where you take action every 20 days:

  • Day 1: Issue an invoice when you deliver the goods or complete the service. The invoice should set payment terms as net 30 days.
  • Day 20: Ten days before the receivable is due, have sales staff call the customer. This doubles as a service call. Make sure the product mate expectations, because sometimes payment is delayed if customers are unhappy. You can now fix any problem before due date. Otherwise make sure the invoice was received and terms are understood.
  • Day 40: Ten days after the due date, call again if the bill remains unpaid. Found out what is causing the delay. If the problem is real, you can deal with it. If you’re being stalled you can escalate the request.

Stay tuned for step 3

ROBERTKA Business Solutions
Focusing on your success.

 

RELATED TEXTS
Getting Paid: A. Basic Collection Practices
Getting Paid: B. Your First Line of Defense
The Concept of liquidity
The Secret to Maximizing Cash Flow

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We are a Media and Communication Company specialized in the production of business information contents, financial and management notions and analysis. We also produce and publish World and African business headline news. We mostly focus on producing text and video analysis covering worldwide economic, commercial, management and financial trends which have a strong leaning and inclination on African businesses and affaires. We publish under the banner of our consultancy house: ROBERTKA Business Solutions.inc Join the conversation!

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