Like a hazy yet visible photograph aged by time, the image of my grandfather
is somewhat amorphous in my mind’s eye but still discernible. My memory of
him lingers as testament to his intelligence, logic and wisdom - often
reflected by the old-as-time truisms he seemed to favor.
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One such hackneyed expression has particular business relevance: “A
penny saved is a penny earned.” Embracing this concept not only
contributes to the success of the fledgling owner of a lemonade stand but to
the prosperity of those who launch all types of enterprises. Indeed,
sustained, consistent and ongoing focus on operational costs (with an
emphasis on savings) will pave the way towards your business’ increased
efficiency, effectiveness and, of course, revenues.
One need not possess a Masters from the Wharton School of Business to
exercise a high degree of proficiency in expense management. The same
lessons that were inculcated to us as children may be applied here:
a) Compare and
shop
Patronize those companies who offer the lowest rates for insurance
premiums, telephone usage, office supplies, etc. as long as the
products/services provided are comparable to their competitors;
b) Conserve
electricity
Turn off the lights, computer, copy machine, et. al. when the day’s
(and/or night’s) work is finished;
c) Reduce
needless waste
Yes, permission is granted for using both sides of the paper and
resorting to white out to correct a minor flaw rather than discarding the
item;
d) Leave well
enough alone
Analogous to the saying, “If it’s not broke … don’t fix it.”
Your tried, true and dependable computer, for example, may not need to be
replaced by the next and best model; and
e) Stand on
your own two feet
By all means, collect a! s much information about systemizing and
marketing your business from a variety of sources (newsletters, journals,
books and information gleaned on the internet). However, if possible, avoid
large consulting fees especially when just launching your venture. The
successful running of your business may still largely depend on your own
capable hands, incisive mind and intuitive heart.
The aforementioned suggestions on streamlining spending represents a mere
ripple in the vast compendium of business cost-savings tips. (The reader may
access a host of such strategies from countless materials.) Rather than
focusing attention on rather common expenditure-reduction ideas, it seems
imperative to now highlight an often over-looked principle: the way a
company collects money may be an integral factor in how much money that
company collects. By devising an advantageous accounts-receivable system, a
business paves the way for favorable cash flow.
One cannot underestimate how crucial cash flow is to a business’
vitality. Indeed, one of the primary reasons any given enterprise fails may
be attributed to cash flow problems where that firm’s expenses outpace
revenues. Future returns cannot offset present day expenditures. Thus, by
maximizing revenues (without having to increase the price of product and/or
service)— by instituting a method where a company collects payments in a
more timely, efficient manner, cash flow becomes more favorable and
concomitant business success appears more likely.
The operative question arises: "How can business owners collect
money due (to them) in quicker, cheaper and more effective ways?"
Several companies address this question by offering outstanding payment
processing services. These services may be implemented immediately and serve
as a means of keeping owners' prices competitive while preserving profits -
a rare combination for today's business establishments.
The following provides a glimpse of several exciting accounts receivable
services:
Automated
payments:
Business owners who desire to streamline their billing process, settle funds
in a timely manner and avoid many collection problems may now opt to utilize
an automated payment system. Here, clients give proper authorization (i.e.,
provide their checking account information) to originate a recurring or
non-recurring payment. Typically, in two banking days or less, funds are
transferred from the customer’s account to the owner’s account. This may
be accomplished via electronic software or paper drafts. Items may even be
re-submitted if any check or pre-authorized payment is returned for
non-sufficient funds!
Many customers are advocates of this service. They are absolved of the
responsibility of directly submitting a periodic payment (assuming they
remember). Moreover, they may decide to purchase that high-priced ticket
item or expensive service as they can now pay a portion each month.
Electronic
check conversion:
A paper check is scanned, and voila, it becomes an electronic item at the
point of sale. Within 48 hours, the funds should appear in the owner’s
business account--a magic-like phenomenon as trips to the bank are no longer
necessary. Conversion machines may come equipped with verification (to
ensure that a potential customer is not listed on a negative database of
individuals who have previously bounced checks) and technology to
electronically collect that "falls through the loop" NSF check).
These features should help owners to feel more comfortable accepting checks.
(According to the “Green Sheet,” businesses can increase their profit
potential 30% by allowing check payments.)
Electronic
check recovery:
When a customer bounces a check, the owner’s bank sends the return check
directly to a processing center. The check is entered into a database and
re-submitted electronically via the Automated Clearing House (ACH) network
two additional times, if necessary, in pursuit of the owed funds. In the
scenario where the funds are still NSF, a paper collections division may be
utilized where the owner still receives 100% of the face value of the check.
Owners can now increase the probability of receiving their entitled
money. In addition, they can concentrate on their core business instead of
chasing down bad checks. There are companies that offer this service free of
charge!
Checks by
Phone:
Though it has not been considered state-of-the art technology since the days
of Alexander Graham Bell, a sizable segment of the business population has
grasped the concept that the telephone may serve as a “technically
advanced” tool - a vehicle which not only functions as a profit generator
but a profit retainer.
Indeed, the telephone is a perfect instrument for securing payments. Upon
the customer’s authorization, funds are electronically (or manually via
paper drafts) deposited into the owner’s account within 48 hours. This is
an ideal service for any collections and/or donation-raising endeavor.
Furthermore, a checks by phone system provides a cost-effective manner of
receiving payment as credit card processing costs are avoided. In addition,
it increases an owner’s potential pool of clients. People with active
checking accounts greatly outnumber those who possess major credit cards.
Ordering via phone is ideal for those who do not have credit card
capabilities.
On the other side of the equation, checks by phone offers convenience and
expediency for prospective clients who no longer have to forward a paper
check order.
Online
Electronic Checks:
Here, a business owner may easily accept and process electronic check
payments directly on his/her website. It takes less than two days for the
funds to be transferred to the business account (a much shorter duration
than a paper check). Again, credit card expenditures are avoided as the
potential number of clients increase. In addition, "impulse"
purchases are more likely to occur. Indeed, it is easier for prospective
customers to quickly fill out the information online rather than mailing a
check.
Credit Cards:
Ultimately, a business owner must still include this option as this may be
the preferred method of payment by customers. Credit card payments may be
secured via the phone, internet and/or face-to-face. A caveat emptor warning
must be issued as many credit card providers overcharge for equipment and
quote unreasonable discount and transaction rates. In addition, subtle fees
may come into play that cause "cash flow paralysis." An owner must
perform due diligence when contracting with credit card providers, taking
price and quality of customer service into account.
As the reader may now easily discern, substantial profits may be obtained
by knowing how to cut expenses and optimize efficiency. It seems paradoxical
that by concentrating on the end result of a transaction process (i.e., the
way of collecting money), one strengthens the entire business process itself
(i.e., the way to cultivate business/money). A vibrant and healthy accounts
receivable system saves more than money; indeed, it just may save the
enterprise!
About the Author:
William Hamilton served for six
years in the United States Air Force. He now co-owns Intellicollect, an
electronic payment processing company. He anticipates that this firm can
offer tremendous assistance to new and veteran business owners alike. Access
the following website to learn more about Intellicollect’s services: www.chexsite.com/members/icollect
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