Four Secrets to Starting A Successful Business, Part 3
So, you want to launch a small business or reposition your company as a managed service provider (MSP). What steps can you take to maximize your chances for success? I’ve written a four-part blog to cover that very question. Tune in each day this week for the next chapter. Here’s part 3: Cash flow.
I was speaking with another entrepreneur — a lawyer — last week, and asked him what single piece of advice he’d give to people who are preparing to launch a business. He said the number one priority has to be managing cash flow.
Even if you complete a successful project, do great work and win respect from customers, any project with unpaid invoices has to be considered a failure, he noted. Lining up managed services contracts isn’t enough. You need a tireless person to chase payment on outstanding invoices.
The entrepreneur’s advice:
- Have a point person in your company who chases payments from customers. Don’t delegate this responsibility to multiple people. That way, a single person will have a complete view of the situation.
- All of your contracts and invoices should clearly articulate when payment is due (upon receipt, net 30 days, etc.).
- Include a potential penalty (interest fees, etc.) in bold letters on your invoices, articulating that late payments will actually trigger increased charges.
- Your CRM and accounting systems should be automated to trigger reminders when payments are overdue. Follow-up with both and email and a phone call to the client.
- Ongoing communications should recap all previous communications, including specific dates and details (“We spoke with your CFO on June 1, 7 and 15 about this. He assured us immediate payment but it has still has not been received.”)
- Escalate communications and go right to the top (your customer’s CEO) if department managers, directors and other contacts are unresponsive to your requests.
Any other tricks of the trade to get overdue invoices paid? I’m all ears.