Better Accounts Equals Better Profit

A good business owner is always counting the cost of the work they do. For a builder, this is moving their margin when material costs rise (thanks COVID), for a mechanic, it is quoting for the time the job will likely take, for the accountant it is billing for the time spent working on the books. Despite this, time spent chasing up unpaid invoices isn’t always taken into account and it can really eat into your profit by taking you away from what you do best.  Whilst it is a necessary evil, we will let you in on a little secret, better accounts equals better profit. Here is why:

Time Wasted

It is easy to get caught up in perfecting your trade and leaving accounts to themselves. Unfortunately, we live in a world where reminders and follow-ups are needed to get things done.  Keeping on top of your invoices and payments, increasing your cash flow will also give you peace of mind, help you sleep at night.  That being said, every call, text, email, letter and meeting is a time where you could be either working, earning greater profits, living life or anything else that is not wasting your time and effort.

Despite all the time and money saving you are achieving in your work, the time wasted here can make a large debt in your earnings. 

Lack of Accountability

Forgetful clients are one thing, what about the evaders or fighters? Unfortunately they exist, many for very good reasons. Ensuring that they are aware that you are watching all your outstanding debt and incoming payments, makes them more likely to pay.  The squeaky wheel gets the grease, so to speak. Even so, following these clients up can be one of the more time consuming processes. Long term outstanding accounts can be the difference between a successful and stressful year.

An example we hear all to often is a small $2k invoice which has had hours upon hours of discussions, meetings and attempts to contact without payment. Unfortunately in some of these cases, the client had no reason to pay immediately as there was no real pressure to do so. Having the correct forms, contracts and plans for these clients is imperative to ensure you are paid.

Some ways to combat this are having the paper work and repercussions set up, like what we assist with in our free protection audit (shameless plug). Being able to legally on-charge admin fees, collection fees, interest and potential legal fees will allow you to be able to hand the matter to debt collectors without having to worry about more time and money wasted.

Lack of Process

So you are a smaller business. Family run? Sole Trader? You may not have or have needed a real process to your accounts management. What steps do you take to ensure you are paid? How can you get better accounts and also get better profit? Some important steps are:

• Credit check prior to engagement
• Quoted works in writing
• Consistent follow-ups for a set period of time
• Firm dates and firm repercussions as a result of prior written agreements

Lack of Time

Especially if you are a smaller business or maybe a larger one with too many invoices to chase up, there is not enough time in the day to recover everything. Most businesses will hire a bookkeeper for a few days a week to cover this. Well done, what a great first step! If you are unsure of what you could do next, our next shameless plug is our Accounts Receivable Process.

Let us handle your accounts for you. Guaranteed, consistent follow-ups, advice and ease of moving those harder cases straight to collection. Have a look at our page here for more info on what this looks like for you and if we can fill the gap in your business. We hope that we can give you a better accounts process so you can have a better profit.  Let us take on the stress of collecting your payments so you can continue doing what you do best.  Making money.