Volume 1, Issue 6
Table of Contents

Cover Story:
Small Business is BIG Business
In Rockland, small businesses are the engine that drives the economy

RBD Round-Up:
How'd He Do That?
The interesting rise of Mal McLaren
RBD Business Survey
How do you communicate?

DEPARTMENTS:

Economic Round-Up
• The Smart Investor
Your portfolio is doing great, so why rebalance?
• Economic Viewpoint
The U.S. Attraction Factor

Business Round-Up
• Down, But Not Dirty
The best way to handle company layoffs is to provide options
• Marketing By Design
The top 15 campaigns of the last 100 years. You know them all, but why?
• Receivables
One of the largest headaches for small businesses

Ask The Experts
• Talking Taxes
• Payroll: Key Issues
• Workplace Hotline

Invest in Your Community
• Where's the Fire?
Rockland Volunteers - increasing efforts and awareness

Odds & Ends
• The Last Minute
• Rockland Newsmakers

Dedicated Section:
Rockland Business Association:

The President’s Desk
New Healthcare Tax
will hurt small and midsized businesses. Here's how.

RBA/United Way Golf Outing
The Rockland Open: Monday, May 21st

RBA Happenings
• Committee and Council Info
• Calendar of Events
• New Members

For many businesses, receivables are what keep a healthy company moving forward and an unhealthy company scrambling to make ends meet. You’re working in your business, instead of working on your business and often don’t manage your accounts properly: late payments and delinquent accounts can pile up, leading to cash flow problems. It can happen to any business.

The flow of accounts receivable is the lifeblood of every business, and turning the accounts receivable into cash is critical for reducing working capital requirements. It’s been suggested that one out of five small business fail, due primarily from bad debt. So companies that can manage their receivables and plan 'around them' have a competitive advantage.

According to American Express, the Commercial Collection Agency Association found that nearly 27% of accounts that are three months past due will never be collected. That figure jumps to 44% after six months, and after a year, the probability of not collecting an overdue account hits nearly 75%. But how do you as business owner manage your receivables? What if you had zero in receivables? Would you reinvest in more into your company?

One of the best ways to avoid long accounts receivable timelines is by doing due diligence on your customers up front. Some owners tell me that they handle the receivables by asking for credit cards up front for their products or services. This way they companies can have more control over their receivables. But what if a potential client does not want to work this way?

Other companies have asked for credit references before entering into an agreement with a new client. Though some owners expressed concerns over this concept. They don't want potential customers to feel as if they are over- bearing.

So what is the right balance of getting to know the new client, but without being too aggressive? One local business owner had this to say: “We keep track of our receivable to make sure it doesn't go past due, keep an eye out for chargebacks or discounts to the receivables, and make collection calls on the receivable if something goes wrong.”

By combining early due diligence with close attention to aging receivables and using strategies like keeping backup credit card numbers on file, small-business owners can get a handle on their account receivables and keep their bottom lines healthy, even when customers are dealing with their own problems.

Here are a few strategies to help deal with receivables:

• Document all transactions in writing. You may have a great relationship, but an oral agreement will end up costing you money. You may be reluctant to take any step that interferes with the selling relationship, but this will serve you well.

• Evaluate your payment practices: Take a look at how your clients and customers have been doing on payments during the last 18 to 24 months. It will give you an idea of which need greater control. In the area of late payment, your analysis may lead you to suggest a program of communication with habitually late accounts beginning on the first day after the payment terms expire in order to alert the client/customer that payment is expected when due.

• Set payment for the same time each month: Instead of billing upon a project or sale is complete, send out all bills the same day of each month.

• Make sure your customers have a copy of your payment terms, either on your invoice or contract or some other sales document. RBD