Credit & Collections Policies vs. Business Plan

Learning to collect on your delinquent Accounts Receivables should be a priority to you when you open the doors of your business.  When individuals make the decision to go into business there is a lot of emphasis placed on writing a business plan but at what point does writing your credit and collections policies become a thought?  Typically when you are not getting paid for the product or services that you have provided is when you spring into action.  This is being reactive not proactive. 

Not enough emphasis is placed on what to do or how to collect from non-paying or slow paying customers.  Organizations such as the Small Business Administration would have you believe that your business plan is the most important document needed to successfully operate your business, which is partially true.  I agree that some sort of business plan is necessary.

Starting and running a business is very exciting and rewarding in the beginning-all the fun stops when you are not getting paid for the product or service that you have provided.  Let's think this through-if your business is suffering then your household is suffering as well?

Now you have to convey to your creditors "I will pay you when my clients pay me" .  The harsh reality is you have taken more of a personal approach with your clients, and you don't want to upset them because they might not want to do business with you anymore.  I can respect the emotional thought process but honestly it's you or them.

 In the start-up phase of your business venture your goal is to go out and market your product or service and chase money latter, sometimes that money you are chasing never comes back to you and the client whom you thought was a "Good Guy" is gone and out of business which can and will soon be you if you don't get proactive.

Don't procrastinate on writing your credit and collections policies.  Thank you for reading my Blog visit us at www.teamfmi.com and subscribe to newsletter


                                                                                                             
Financial Management Institute
Kenneth Grayer
CEO/President
Email: training@teamfmi.com