By Mike Callaghan, Process Prodigy Contributor
One of our clients, Karen, had been running a home-based accounting business for two years. She had grown it into a successful business that was doing very well. Karen had more clients than she could handle, had actually been offered permanent positions by two of the clients, and had hired a full time assistant/office manager to help organize her company. Karen was living in Los Angeles and one of her biggest problems was the crazy LA traffic. In driving from client to client she was frequently late. Her assistant took care of that problem by scheduling more travel time in between appointments. The second problem was that she was always scrambling around before the end of the pay period to have enough money to pay her assistant. Invariably she would say things like, “I really have to invoice my clients so I have money.”
Karen was an accountant and loved what she did. Tax forms, cash flow statements and accounts payable make my eyes glaze over, but Karen loved her work. What she didn’t like was billing her clients, especially the ones who weren’t super profitable, because she felt guilty about asking them for money that she knew was not there. Karen’s dilemma was creating a collections system that worked for her and made sure she had cash in her business.
We quickly decided that Karen should not be responsible for billing. Generally speaking, in a service business, the people providing the service are invariably the worst choice to be in charge of client billing. Most of the time, whoever is providing the actual service is focused on doing a good job, providing the best service to the client, and - especially in the case of small business entrepreneurs – putting in whatever extra hours are needed to complete a project and make the client happy. Therefore, in this case, we created a system where the office manager was responsible for the billing and collections systems.
The first step was to create an invoice before the work was done. The office manager scheduled appointments for Karen and had access to her calendar. Whenever an appointment was scheduled, the office manager generated an invoice with the description and estimated amount due. At the end of the week, the office manager would forward all of the estimated invoices from the previous week to Karen for her approval. Once approved, they were mailed out to clients. This provided Karen with the opportunity to review and correct any invoices without spending the time to send them out. For example, if an appointment was scheduled for two hours and only took one, the invoice was corrected before it was mailed out.
In this system, Karen’s role with the client was only as an accountant, an employee of the company. She was no longer the bill collector; calling on the phone and hounding clients for money. Karen was simply completing a task for the “nagging” office manager who wouldn’t leave her alone about these invoices.
The system that we designed was not revolutionary or some hi-tech solution. Instead, the system included the evaluation of each task to be completed and a determination of who was best suited to handle it. In this case, Karen was the accountant – which she was well suited to be - and the office manager took on the task of handling accounts payable. With the right person in charge – the actual work got done and there was always money available at the end of the pay period for paychecks.
© 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.
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