No matter how innovative or popular your product or service is, if you start losing track of your finances, everything can go sideways before you even know you’re off-course.
Passion for your business can overwhelm and detract attention from the headache that is handling your profit and loss, or confronting flaky customers who aren’t keeping up with payments. Although this is never fun, it is always possible to leverage technology to deal with the worst of it all in the background. Automation software can regulate multiple finance processes without human intervention and therefore less error, so you can attend to what really matters to you, your customers and your company.
Ensure income with Invoices
Manually maintaining your cash flow makes way for misplacing vital figures. Of course, things get in the way; contacting a new client, growing a project scope or another distraction you just can’t seem to avoid. However, you can avoid being underpaid or working for free by updating quotations and digitally tracking your precious time spent, as well as assigning costs and materials on a task by task basis using a program’s system so you always know where it is. Automation software can do all this and also use all the data to generate invoices and automatically send them to your customers when the time is right.
Weed out the weak payers
It is not enough to make sure that all of your dues are received, it’s important that it is all done in good time. Consistency in how you go about this process will shape how this happens.
Sending statements of account to your customers, or payment chase letters, are processes that can easily be automated, and in doing so spawns myriads of benefits for you personally as well as your business. Set up professional template letters for your statements and chase letters to make getting payments in much smoother. Software can allow you to target specific customer groups and pick up with whoever is lagging behind by using custom criteria, with strongly worded letters to encourage prompt payment. Once you have identified the consistently poor payers, consider your choices (see next section) – because they are there.
Get a piece of Pareto’s pie
At the very beginning of your business, you probably took in as many customers as possible. Along the way, it becomes priority to please your existing customers and find potential ones to introduce your products and services to. However, have you ever noticed that you make most of your profit from only a few customers? This phenomenon, mentioned in another article about CRM, is known as the Pareto principle or the 80/20 rule; 80% of your total profit comes from 20% of your customers or amount of work.
When you think about it, do you have customers that are actually costing you money? Dropping a client may not seem like a choice but you are only spiting yourself by bending over backwards for problematic customers that continually make unreasonable demands, pay late, are indecisive, or pester for substantial discounts; you have a finite amount of resources, staff, time, budget. Instead of straining these, you could use them to invest in customers that are worth putting effort into. Manage this by ranking your customers through a system that illustrates your best and worst clients, and you can then target your resources in the most productive direction.
Record audits to maintain order
You should have full control over every bit of information concerning your transactions: knowing who paid what, when and how. Make sure that you know every penny of income and outgoings have been accounted for, and store them in a safe system you can access at any time. Organize and record any refunds or credit notes issued, then track them so that you offset any credits against the money owed to you from your clients.
It is also essential that money is tracked from the moment it enters your business to when it reaches your bank account. With the correct audit reports in the right place, all the details about the process are at hand. In case of anything like a fraud investigation, you can be rest assured that all the financial information is taken down at every step – better safe than sorry.