Everyone has a different opinion about why small business fail: poor planning, lack of good management, lack of funding, mismanagement of funds. I offer as my opinion, “Receivables” collecting and tracking. No, the number one reason is not enough money, it is the collecting and tracking of money owed to the business. Business owners are caught up in the day to day operations of running their company, getting the business, selling, and managing employees, and in an effort to keep cost down they also believe they can attend to the record keeping of the company. This usually happens in the late evening or the wee hours of the morning. Because enough attention is not being paid to the record keeping, things slip through the cracks. The billing is done six weeks out and the aging is never collected. Receivables that are past due with balances of twenty or fifty dollars are not bothered with, because there are more pressing matters to attend to. The next big client is more important than a handful of small clients. Change how your company does its billing and watch your company grow.

Six steps to help with Receivables:

1. Frequently billing clients. Clients have an easier time paying a small bill than a larger one.

2. Consistent billing, the same day of the month, or the same date of the month.

3. If its a large client, get a deposit.

4. Plan one day every week to take care of aging accounts receivable.

5. Make sure staff is aware of clients that are past due.

6. Do not let client’s problems become your problems.