Cash flowing into a business can mean the difference between operating profitably or going out of business. The Small Business Development Center hosted by Santa Monica College advises business owners to take the steps needed to create positive cash flow.
Buying inventory that's not able to be sold and extending credit to customers who pay late are among the common problems.
Unpaid invoices are a source of cash that some business owners have a hard time collecting.
Wolfgang Kovacek is an entrepreneur who personally experienced the pain of customers not paying bills. He owned a web design firm, experienced cash flow problems when he didn't collect unpaid invoices, and had to lay off staff.
"Since that time, I've found that about 80 percent to 90 percent of customers pay on time. The ones who don't can drain a company. Debts depreciate quickly and after a few months, you don't stand much chance of collecting."
His experience led to a new career and today Wolfgang shows solopreneurs, medical practices like chiropractors, tradesmen, and membership-based groups like schools and fitness centers how to collect immediately.
"Business owners have so many different tasks to carry out that stopping to collect one out of every 10 to 20 invoices is time consuming and may not produce results."
He offers a cloud-based system through Transworld Services that charges the business owner a small fee per account versus offering a traditional collection agency service.
"Collection agencies are facing more compliance issues than three years ago and our company has spent millions to ensure compliance in all 50 states."
Wolfgang says there are various reasons for delinquent accounts like the contraction of the economy or chiropractors who face complexities with the follow-up of insurance companies. He also works with medical offices who are facing rigorous changes in codes to implement electronic health care records.
It's not just small companies that face collection challenges. Businesses with a four-person department can implement an automatic system, reduce labor costs, and re-deploy one or two people in another function that benefits the company.
Wolfgang also advises business coaches on how to help their clients collect more effectively. Visit his website for cash flow management tips.
Click here for the California SBDC cash flow tips.