MY BUSINESS partner and I have been running a successful internet pharmaceutical company for the past 15 years. With increased growth, we have picked up more customers but we are beginning to run into a few problems with receiving payment on time. Being a small business wholesaler a lot of our customers are becoming lax and some are now six months overdue because they know we don't have the people to chase them. We don't have the money to launch legal action to get them to pay, but we need to pay our bills, too. What would you recommend?
The most common problem for business is cash flow and it's a vicious cycle. You're not collecting your own debts, which means you can't pay your invoices on time, so those businesses you owe money to aren't getting paid and it goes on and on.
The bottom line is that you have to manage your accounts from the start and be really proactive in the collection process. If you prefer to settle debts out of court, which I definitely recommend, here is what you have to do.
Start early and be absolutely steadfast. If you're late in your invoicing, you can expect the payments to follow suit. If it's a reoccurring invoice, make sure you're billing at the same time every time. Don't let it slide and then try to collect a big payment all at once. It's not going to work in your favour.
Talk to an expert about budgeting and cash-flow forecasting. The Bank of Queensland has good factoring solutions for businesses. You should also consider an adviser who can help you with the management of your accounts, finance, loans, etc.
We do this kind of work for a lot of small businesses and it saves them thousands of dollars. A proper adviser can be worth his or her weight in gold they'll ensure your business is running the way it should be so you can concentrate on the bigger picture.
I HAVE an established franchise in a busy shopping centre. I have been operating for close to 10 years. While I realise that for many of my staff my business is just a job to help them through university, I am having problems with some staff that interview well but then become completely uninterested and unreliable shortly after being hired. How do I find staff that will care about my business?
You can't expect that a 20-year-old kid is going to have the same passion for your business as you do, so setting clear objectives both for your staff and for the business as a whole will be essential to attract the right employees.
You need to ask yourself one question: what do you want out of your business? Do you want to be the best shop in your franchise network? Do you want to win awards or hit a certain target? By identifying your top priority as a business you can then take your employees along on the journey.
When you know what you want from your staff, you need to then identify what motivates them. For uni students, cash is probably the best incentive, but challenges are also great physiological motivators.
So take a look at what you can do to get the most out of your people, and make a conscious effort to challenge them every day. Young people become disinterested out of boredom, so keeping your staff accountable and motivated will get you a better outcome.
Join @markbouris on Twitter from 4pm-5pm (AEDT) today for live Small Business Q&A #bizQ&A.
Mark Bouris is executive chairman of Yellow Brick Road, a wealth management company and small business adviser offering products and services for home loans, financial planning, insurance, superannuation, investments, accounting and tax: ybr.com.au.
Email questions to Max Mason at max.mason@fairfaxmedia.com.au.
Frequently Asked Questions about this Article…
How can a small business improve cash flow when customers pay late?
Be proactive from the start: manage your accounts closely, invoice on time and consistently, chase overdue payments early and steadily, and talk to an expert about budgeting and cash‑flow forecasting. The article also recommends considering an adviser and bank solutions (for example, Bank of Queensland factoring options) to help stabilise cash flow.
Why is it important to invoice at the same time every billing cycle?
Consistent invoicing trains customers to pay on schedule. The article warns that late or irregular invoicing often leads to late payments, so billing at the same time for recurring invoices reduces the risk of large, hard‑to‑collect balances later.
What practical steps can I take to collect debts without going to court?
Start early and be steadfast in your collection process, follow up promptly on overdue accounts, use clear invoicing and account management, and engage an adviser to help structure collections and cash‑flow plans. The article recommends settling debts out of court where possible because legal action can be costly.
When should a small business bring in a financial adviser?
Bring an adviser in as soon as cash‑flow issues appear or when you need help with budgeting, forecasting, accounts management, finance or loans. The article notes that a proper adviser can save businesses thousands and free you to focus on running the business.
What role can factoring solutions play in managing business receivables?
The article suggests considering factoring solutions to help with cash flow and notes the Bank of Queensland offers good factoring options. It recommends speaking with your bank or an adviser to see if factoring suits your business needs.
How can franchise owners find and keep staff who care about the business?
Set clear business objectives and communicate what you want from your staff, then identify what motivates them. Taking employees along on a defined business journey and holding them accountable helps attract and retain those who will care about outcomes.
What incentives work best for younger or university‑age staff in retail or franchise roles?
The article highlights that cash rewards are often effective for uni students, and that regular challenges and varied responsibilities help prevent boredom. Keep staff motivated and accountable with clear tasks and ongoing challenges.
Who is Mark Bouris and how is he connected to small business advice?
Mark Bouris is the executive chairman of Yellow Brick Road and acts as a small business adviser. The article notes Yellow Brick Road provides wealth management and services including home loans, financial planning, insurance, superannuation, investments, accounting and tax.
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