Featured Coaching Training: 6 Thunder Moves for Collecting Accounts Receivable
Struggling with cash flow and collecting accounts receivable? In this series, we'll teach you super moves that will improve your business' collection practices and ability to ensure that money is coming into the business for everything you sell.
Featured Coaching Excerpt - Notes & Transcript, Part 1
Collecting Accounts Receivable: Thunder Move #1 - Get paid in advance
Action Step: Collect payment in full, get deposits, collect half and get some cash coming into the business.
- Thunder Move #1, Get Paid In Advance. Okay, so Clay, what are we talking about? Get paid in advance? Why is this such a hard thing to do for business owners?
- In the service industry, I've worked with a dentist, I've worked with orthodontists, you know, dentists, orthodontists, plural, worked with roofers, I've worked with fence companies, I've worked with mechanics, I've worked with carpet cleaners, I've worked with flooring installers, I've worked with plumbers, I've worked with builders, why am I making this list? Because every one of them was helped dramatically by doing this move. So when you answer your phone, boop boop boop boop boop, Thank you for calling Clay's Construction, how can I help you? When you go out there and you give the person a bid or a quote, before you start the project tell them the payment terms, and make sure the payment terms don't involve you lending them money. So you want to say to that person, you'll say "Hey, we will require a 50% down payment to get started, and the remaining balance is due when we're done." Or something along those lines, but that's how you do it.
- Okay, so get paid in advance. That's this first Thunder Move here.
- Yeah, and -- that's it, so that right there. That'll tell you, somebody right now, think about the implications. One business owner I worked with, he literally was able to, check this out, he had a person who, their full time job was collecting payment from customers after he did the job. That was their full time job, that was like $50,000 a year being spent just collecting money. So what we did is that person's job no longer existed because we didn't have to collect any money, we collected money on site, so what we did is we took those hours, that $50,000 a year we were spending on that position, and we kept the person employed, but now we put them on proactive stuff, like marketing, and now that same $50,000 salary, instead of being on the defense and collecting money, that became on the offense, and that person's full time job was doing search engine and online marketing, and it changed the business. That's how you win. This is how we do, you know what I'm saying? Just unbelievable, shameless, game gangsta rap references there, I'm just giving you all sorts of lyrical miracles today, guys.