The next death by another little cut
Not Paying Attention to Collecting Your Money
“I don’t know why we are having cash flow problems. We’re busy.”
When this business owner finally started paying attention to his aged receivables report he discovered that several of his customers owed him more than $100,000 that was over 90 days old. He had hired John, an accounts receivable clerk who, in the beginning, was doing a phenomenal job and their accounts receivable days dropped to under 45 days. This was good for a B-to-B company.
He stopped paying attention to the accounts receivable aging report, assuming that John was doing his job.
The only reason he paid attention again was his bookkeeper told him they were headed for a cash flow crunch. He dug in and discovered that John had stopped doing his job well.
Every week, when you receive your weekly cash flow report (email me at ruthking@hvacchannel.tv for a copy of the report), an aged receivables and an aged payables report should accompany it.
Look at it!
See which companies owe your company money, and just as important, who your company owes money too. Pay attention to supplier invoices. You’ll be able to quickly tell whether an employee is purchasing materials and supplies in great quantities.
Find out why and if those purchases are justified.
Accounts receivable and accounts payable aging reports are critical to protecting your cash flow.
Next week – another little cut.
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