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Systemizing Your Business: STOP Before You SIGN on the Dotted Line

By Sandye · Comments View Comments

Friday, June 5th, 2009

Thoughts from your Systems Goddess, Sandye Linnetz, Process Prodigy

You found it! That product that could make a real difference in your business is available. You got the details and, yes, it looks like you should invest the money and go for it… Now, what do you do BEFORE you sign on the dotted line?

STOP, LOOK and LISTEN

STOP to make sure that “this is the one” by asking yourself: Is this the only game in town or can I get this somewhere else? Shop around before you buy. LOOK around to see what else is available, what other people are using, and LISTEN to what others have to say about the company you are about to engage. When you are ready to say “yes”, do so with the knowledge that you’ve done your homework – that you are clear about what you are expecting and that what you are expecting is a promised result.

If you’re “gambling” with $100, it won’t make or break you; when you’re putting thousands of dollars on the line you need a sure bet.
Any contract you sign should spell out what is required of each party.

What are you agreeing to? How much are you spending in dollars? What else are you agreeing to in this exchange for products and/or services? Said another way, what else is contractually required of you (time, implementation, following prescribed “advice”, homework)? What are you getting for dollars spent?

What is the product or service? What is the promised result? Is it measurable? By whom? Have your expectations been made clear to – and agreed upon by – your vendor?

What is the cost? How are payments – if any – to be made?
When is payment due? What happens if you are late in paying or miss a payment?

What if you “change your mind”? Do you have the right to terminate or cancel the policy? Are there time constraints? Is there a grace period – a set amount of time for you to decide that your decision was either good or bad for you – and cancel the contract? What would be considered “cause” for cancellation? What is the recourse if you are not “satisfied” that the promised result was produced? Don’t sign anything unless you are confident about the results and willing to pay accordingly.

You did the homework… you signed on the dotted line. Now make the payments and reap the rewards!

© 2009 Beth Schneider, Process Prodigy, Inc. Want to reprint this article? Feel free as long as you include the following: Beth Schneider, President of Process Prodigy Inc., www.processprodigy.com, along with her team of highly sought after operations consultants, reveal the insider secrets billion-dollar corporations pay thousands of dollars for. Specializing in process creation, Process Prodigy tools and techniques have helped entrepreneurs increase productivity by as much as 600%, and revenues by as much as 250%. Visit www.processprodigy.com/ezine and grab your FREE systems starter kit valued at $297.00.

Categories : Contracts, Money Management

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Systemizing Your Business: Calm and Collected!

By Sandye · Comments View Comments

Saturday, April 4th, 2009

Thoughts from your Systems Goddess, Sandye Linnetz, Process Prodigy

Customers love to pay with their credit cards. It’s fast and easy and payments are instantly deffered. Some customers get points or mileage; some a percentage back in cash. It’s pretty much a no-brainer… until the card is DECLINED!

Business people love to have customers pay with their credit cards. It’s fast and easy and payments are almost immediate. There’s no worry about checking credit or bounced checks and it’s simple to set up automatic payment plans. It’s pretty much a no-brainer… until a card is DECLINED!

In this economy credit cards can be both a saving grace and a huge problem for customers and business. While using credit cards gives the customer the opportunity to buy goods and services, and pay for them at a later date, and for the business it may mean more sales, higher prices and good will, there are also some major disadvantages. There are, of course, the administration costs but the biggest risk is that customers may be buying more than they can afford. Now we’re talking bad debt, aka, declined credit cards!

Not only are declined cards difficult to collect on, they are also sometimes difficult to monitor. Let’s look at a couple of other ways to get paid…

Advance payments: An advance payment, or simply an advance, is the part of a contractually due sum that is paid prior to delivery for goods or services sold. If the advance covers all of your costs, you stand to lose only the profit if a bill is not paid in full. The balance due may be invoiced (some risk involved) or may be payable ON delivery (you’re covered in full). Of course, without good incentive – like a hefty discount – few customers will want to pay you before they receive their products or services.

C.O.D.: Collection on delivery of all payments due. Again, you are paid in full and there is no risk of non-payment. And, as with advance payment, you may have to offer a customer incentive… or, charge a higher price when NOT paid in full on delivery.

Financing: Your company can handle it’s own financing (specific payments set up to be paid regularly over a specific period of time) and there is generally the advantage of either charging a higher price or collecting interest on the money due. There are, of course, the possibilities of non-compliance (no payment) and subsequently, bad debt. You can also set up financing for customers with a bank or other lending institution. This way you are paid up front and the financer takes on both the risk and the profit of interest to be paid.

Factoring: Factoring is the transaction where your company sells its accounts receivable (its invoices) – at a discount – to a third party (called a factor) in exchange for immediate funds. Although you are collecting less money, it is immediate, risk free and you have cash on hand to finance continued business. Factoring is not a bank loan. The money you receive is based on the value of your receivables – essentially a financial asset – not on your company’s credit worthiness. Factoring is a very valuable alternative for you if your cash flow is insufficient to meet your current obligations or cash needs for growth. You might consider factoring (selling your invoices at a discount to their face value) if you calculate that you would be better off using immediate proceeds to bolster your growth – rather than waiting for the income or possibly risking non-payment and functioning as your “customer’s bank.” Remember, however, this is a three party process and the factor will determine their “charge” based on amount of invoice and the viability of collection. In other words… the factor isn’t looking for bad debt, either.

There are many possible payment strategies available to you. Some involve more money… some less risk. You will have to decide what will work for you and keep you CALM and COLLECTED!

Categories : Credit, Money Management

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Systemizing Your Business: Get What’s Coming To You!

By Sandye · Comments View Comments

Thursday, April 2nd, 2009

Thoughts from your Systems Goddess, Sandye Linnetz, Process Prodigy

You made the sale! Congratulations, but you’re not through yet. No sale is complete until payment has been collected. No, really. Having that signature on the bottom line is great, but without receiving the payment for product or services sold, you haven’t made a sale. A sale is a transaction; a deal. It requires that there is performance by both the seller and the buyer. Nice to do your part… Vital that you ensure that the buyer is also holding up his end.

An astounding number of small business never bother to get paid! (Talk about money hiding in the system!) Hard to believe that some businesses don’t do follow-up in an area that is so essential to their operation, but that’s the way it is. Yes, it would be great if all of our customers paid us as promised – without our monitoring of them – it just doesn’t always happen that way. Sometimes customers forget to pay, lose the invoice or their funds are tight…and sometimes they just don’t want to pay! Unless you have an effective system in place for handling and monitoring collections, consider that YOU HAVEN’T MADE THE SALE!

If you want to stay out of the debt collection business – and I assume that you do – there are a few simple payment collection methods to consider:

• COLLECT PAYMENT IN ADVANCE

• ASK FOR PARTIAL PAYMENT IN ADVANCE AND ASK FOR A CREDIT CARD OR POSTDATED CHECK FOR THE BALANCE

• SET UP DIRECT AUTOMATIC PAYMENTS FROM THEIR ACCOUNT TO YOURS

• REQUIRE PAYMENT IN FULL AT TIME OF DELIVERY OR SERVICE

Let’s assume that you have not chosen to do use any of the methods listed above, and instead you either trust that payment will be made or send out invoices and statements. Now what? Step one is to have your account information recorded in a way that makes it quick and easy to see who owes you what… and since when. There are numerous accounting programs available to help you record and track monies due. You do, however, need to do constant updating or even the best program won’t help you. Unless you are a one-man-band, assign one person to be responsible for accounts receivable. Have that person be accountable to you… with monthly status reports and bi-weekly updates. You should be aware, at all times, of what monies are due into your company.

Next, decide how delinquent you are willing to have a customer be before you initiate collection. Often it will make sense to do this within a day or two of the bill being payable. The longer you wait to call the longer you will wait for payment.

Remember, this is a call to simply remind the customer that a bill is due. Make sure that you are speaking with the person who is actually in a position to pay bills; the person who handles accounts payable. Check to be sure that, if you sent an invoice or statement, it went to the correct person, and verify that the address in your records is correct. Afterall, we sometimes make mistakes, too. If you start out with an inquiry call (e.g. Did you get the invoice?), rather than a demand, you are allowing your customer to pay without upset. A friendly reminder that allows your customer to save face may be all that it takes to get paid. And, hey, it could have actually been an honest mistake. Be sure to record that you made contact – with who and when payment is expected.

Obviously, if the inquiry call doesn’t work; if your customer has a long list of excuses and won’t be pinned down to a by when date for payment, or if the new promise to pay date has passed, a demand for payment is the next tactic. A demand doesn’t have to be – and shouldn’t be – a threat. You supplied a product or service and your customer agreed to pay for it. Now you are letting your customer know that you want to be paid immediately. Ask for a credit card payment over the phone. If this isn’t acceptable, get a commitment from your customer for an agreed upon date for payment to be received.

Follow up the phone call (usually the most effective means of collection) with an email and/or letter. Send a customized, personal letter, not a form letter. You can create a number of templates and customize them as necessary. As part of your system, these will be in your computer; ready to customize and send. Remind the debtor of his or her original promise to pay, and ask for full and immediate payment. Just don’t wait too long between contacts. Again, RECORD all pertinent information and agreements in your accounts receivable program.

It is extremely important to age your accounts receivables, i.e., 0-30 days, 31-60 days, more than 60 days. (If more than 20 percent of your billings are more than 30 days past due, immediate further action is necessary.) If you are doing bi-weekly updates, nothing will fly under the radar and you will know if payment agreements are being met.

There are times when negotiating your charges will be the only way to be paid. Naturally, you will ask for payment in full, but you may have to negotiate down or take a partial payment immediately and create a new payment plan for the balance. You may even consider a discount if there is an immediate payment in full. Again, record and track all payments. Staying aware of what is due… from who… and by when… is the most efficient way to be sure that your money is lost in the daily minuetea of selling.

If you don’t get the desired results from your collection efforts there is always a collection agency. Frequently, just getting a letter from them, and the threat of bad credit, will get you a payment. Small claims court is another possibility if all else fails. Yes, non-paying customers are a problem and a nuisance. Your job is to stay in contact with them and collect what you are owed. By staying in constant contact – through phone calls, emails and letters – you may at least be the first in line when they are ready to pay bills.

There is no greater priority than collecting the money that is due to you. The only really good customers are the ones who pay their bills on time, and the only good sales are the ones where you get what’s coming to you.

Categories : Bottom Line, Credit, Money Management

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Systemizing Your Business: Be a CREDIT to your COMPANY

By Sandye · Comments View Comments

Monday, October 27th, 2008

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Thoughts from your Systems Goddess, Sandye Linnetz, Process Prodigy

“It takes money to make money”! I don’t know who said it, but we all know how true it is! Do you have enough money on hand to grow? Does your company have a credit rating? Can you get the money you need when you need it? No, your Systems Goddess is not in the credit and lending business, but I can help you in creating a system to establish yourself so that getting credit is easier.

So often, those of us who have good personal credit, depend on that for our company. Big mistake! Step one is to separate your personal credit from your business credit. This will protect you and your personal credit and assets “just in case” of a business shortfall and will also protect your business credit and assets if you have a, dare I say it… personal “problem”.

To separate personal from business credit you will need to either incorporate or form and LLC (Limited Liability); making your business it’s own entity. If you are currently a sole proprietor or part of a partnership, you are personally liable for the whole package (ouch)… including lawsuits and debts. The objective here is to create a business – not just do business.

Did you already establish a bank account under your legal business name? If you did, then you have already completed one big step, because you can’t open a business account until you have filed a DBA (Doing Business As) and registered your business name. You must also have an EIN (Employer Identification Number). Here’s a short list of the things to do:
1. File a DBA
2. Apply for an EIN
3. Open a bank account in the EXACT, legal, company name
4. Secure all necessary business licenses, permits, etc.
5. Install a phone line (directory listing) in the EXACT, legal, company name
Now it’s time to start establishing credit. Do you currently do business with vendors who extend credit to you (even a small amount of credit – or lousy terms counts here)? Good start. Get yourself established with 3 to 10 vendors, and, where possible, apply for company credit cards with them… think Staples, Costco, etc.

Time to register your company with all three credit-reporting agencies:

Trans Union, Equifax & Experian

On line set-up is generally quick and easy. There are even companies on the internet that will do most of this for you. This is not necessarily the fun part, however, unless you love detail work and are ridiculously proud of your payment history.

Get yourself at least two or three NON-Personal credit cards (don’t forget the suggestions above). Make sure that these accounts are established in your company name ONLY. There are banks that will set up a business account without your social security number attached if you meet all of their other business requirements. Check with your bank – and make sure that the credit card information is reported to the BIG THREE. Okay, start using the cards… gently! Here’s the concept that can make or break your credit:

PAY ALL OF YOUR BILLS ON TIME!

It’s vital that you get set up with all three business credit agencies and that you have vendors who report to them. Find out who those vendors are and establish credit with some of them. Creditors who do not report to national agencies won’t do you any good here.

This is also the time to see if you can find an appropriate bank to issue a small business loan… that, of course, you will diligently control.

Okay, that’s the start. Now create a system to manage your credit. Due diligence followed by careful monitoring – borrowing followed by timely repayment – and you are a CREDIT TO YOUR BUSINESS!

© 2008 Beth Schneider, Process Prodigy, Inc. Want to reprint this article? Feel free as long as you include the following: Beth Schneider, President of Process Prodigy Inc., www.processprodigy.com, along with her team of highly sought after operations consultants, reveal the insider secrets billion-dollar corporations pay thousands of dollars for. Specializing in process creation, Process Prodigy tools and techniques have helped entrepreneurs increase productivity by as much as 600%, and revenues by as much as 250%. Visit www.processprodigy.com/ezine and grab your FREE systems starter kit valued at $297.00.

Categories : Business, Credit, Money Management

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Systemizing Your Business: You Can BANK on Your Systems

By Beth Schneider · Comments View Comments

Friday, October 10th, 2008

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Thoughts from your Systems Goddess, Sandye Linnetz, Process Prodigy

I just finished reconciling my bank accounts. And they balanced!!! I actually look forward to getting my statements and doin’ the math. The first step to good money management is knowing what you have and where it is… Step two, as you probably guessed, is having a strong and effective system in place to stay fiscally aware and, of course, solvent.

The benefits of a money management system are many-fold. Aside from the obvious; you don’t spend more than you have and you pay your bills on time, your accountant will love you at tax time and you may actually be able to sleep better at night! Burying your head in the proverbial sand will not allow you to take charge of your financial situation at any time… let alone these troubled times.

Let’s look at some possible systems you may want to add to your life. Foremost, of course, is a system for actually knowing what you have and where it is. If you have a computer program for tracking, “good on ya”. (Sometimes it’s as simple as using Quicken or another like program). Note: As with any other system, even Quicken won’t help if you don’t stay with it and keep it up to date.

Analogy time: When you want to loose weight you think diet and exercise, don’t you? You generally start by becoming aware of what you eat and how much you do physically. Sometimes taking responsibility for your weight involves simply keeping track of what you eat and how much exercise you get. What foods and drinks – and in what quantities – go into your body? When are you most prone to eating those “extra calories? When, where and how much exercise do you normally get?

Now, following that system, begin making written lists. How much money comes in… and from where? What do you earn? What incoming funds are recurring and how much comes in randomly? What do you have in savings – and where is it? Next, what are your fixed and/or recurring expenses (rent or mortgage, car payment, etc.?) and what are your “regular” random expenses (taxes, magazine renewals, hair cuts – get the drill)? It will really benefit you to actually write out where your money goes… maybe even keep a financial diary for a few weeks. You’ll probably amaze yourself when you find out just how much you actually spend on misc. “stuff”. Naturally you’ll want to list all of your bills – and look back to see what you generally spend on necessities like food, medications, running your household and maintaining your lifestyle. Clothing, cleaning, personal care and auto maintenance may be taking a bigger chunk than you realized!

And savings… I laugh when people tell me that they can’t afford to put any money away. I have yet to meet anyone who doesn’t waste money that could become an emergency fund. Have one less Starbucks every day and put that in the bank. I’m sure that, if you keep a money diary, you’ll see where you could cut and save. Your bank has all kinds of plans for you to follow. Even a Christmas Club works!

Okay, once you have actually determined what comes in and what goes out, it will be time to make some serious decisions. Can you actually afford your lifestyle? If the answer is yes – congratulations! If it’s no, start making some choices… When you are being responsible about your financial shape you’ll notice what is out of sync and what is working.

Your checking account is a great tool for managing your money. As you spend, record it and note a category. Many on-line programs will actually track everything for you. And, hey, balancing that checkbook on a monthly basis will actually keep you on target. YOU CAN BANK ON IT!

Categories : Money Management, Systemizing

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