Do Not Let Receivables Interfere with Payroll

1. Do Not Let Receivables Interfere with Payroll Over the years, there have been plenty of instances of companies being unable to pay their employees and eventually going out of business. It is a reality that probably occurs more often than it should. Perhaps the most frustrating thing about it is that some of the closures (not all) could have been avoided if more attention were paid to accounts receivables. When companies have trouble making payroll, it is usually not because of things like ACA compliance or lack of sales. It is usually because customers are not paying their bills on time. Furthermore, delinquent receivables create a chain reaction that affects multiple organizations down the line. One of the things we try to encourage our clients to do is to make every effort to avoid allowing receivables to interfere with payroll. One of the most effective things small businesses can do in this regard is transferring in-house payroll to a full-service payroll provider like BenefitMall. Letting us keep track of all things payroll allows our customers to concentrate their efforts on more important things – including getting receivables under control. Obviously, going with a full-service payroll option is not all there is to it. Business owners still have to make a concerted effort to manage receivables. The question is, what does a business owner do when customers are paying their bills? We have a few suggestions. Make Immediate Contact If the terms of a company's billing is 30 days, someone should be making contact with delinquent customers on the 31st day. In other words, do not delay contacting customers behind in their payments. In some cases, delinquency is just a minor oversight. In other cases, it suggests that a customer might be having their own financial troubles. Business owners need to know this so that they do not continue selling to risky customers. BenefitMall

2. Remain Firm about Terms Small business owners also have to be careful to remain firm about their terms. It is true that you do not want to jeopardize relationships with customers by being heavy-handed, but it's also unwise to be too flexible about receivables. Your customers cannot survive in business if they don't receive the monies due them; it's not reasonable for them to expect you to survive if they don't pay their bills. You just have to be firm. Review Receivables on the Schedule One area in which a lot of small business owners fall is keeping track of receivables. It's very easy to put receivables in the lap of the accountant and then simply forget about them all together. However, doing so is not a smart move. Business owners should be reviewing their receivables on a regular schedule. They need to know what their receivables look like in order to properly manage cash flow. Obviously, making payroll on time requires having enough cash in the payroll account to do so. Utilize Professional Collections As a last resort, small businesses sometimes have to utilize professional collection agencies to settle receivables accounts. Again, this is not something you really want to do to your customers unless absolutely necessary. But if you have to choose between a delinquent customer and making payroll for dedicated employees who work hard for you, choose payroll. A delinquent customer can be replaced a lot more easily than disgruntled employees who walk because they haven't been paid. Hopefully, you have never had trouble making payroll on time. If you have, we encourage you to consider a full-service payroll solution from BenefitMall. You also might want to look at your receivables. Do not let problem receivables interfere with payroll. It's not worth it. BenefitMall