All we hear these days is about having less. Less jobs, less pay, less fat, less calories, less stress, less time, less help, less expenses, less support. Less, less, less.
Let’s talk about a new concept. More. That’s right More, not less, more. A good more, not a bad more. Not more work, not more time, not more to learn, not more to do. More, more for you and more for your business. In fact, 15% more.
How do you get more? Great news, you’ve already got it. That’s right. You’ve already spent the time and money in marketing. You’ve already spent the time, money and manpower on sales, and you’ve already spent the time, money and manpower on your product or service.
You’ve already spent it and you’ve already got it. So, if you’ve already got it, why haven’t you experienced the 15% more? Where is this 15% more? It’s been right in front of you the entire time. It’s right there in the asset section of your Balance Sheet. No, not sales, not inventory, it’s in your receivables. If you are like 99.9% of other businesses, you have never looked to your receivables to advance the growth of your business. You have never looked at your receivables as a key to your success.
It’s understandable why you think like this. Most business classes teach a business owner how to deal with bad debt or how to apply for working capital loans. What they should teach a business owner is how to “manage” the receivables so they don’t get bad debt or need loans.
Two years after starting my business, I attended a very well known business class called Fastrac, sponsored by Georgia Power and the Small Business Development Center (SBDC). This class was designed to help business owners learn how to better manage their business, from start to finish. The table of contents seemed to be missing something. I asked the speaker, “Where do you teach about managing the AR?” He said, “We don’t. We cover the importance of building a relationship with your banker and we help you read your balance sheet to determine when you need help from your banker.”
Most businesses have been brain washed into thinking that bad debt is part of business. So most businesses “spend” time, “spend” energy, “spend” manpower and “spend” money” reacting to their bad debt. I call these investments band aids and these band-aids are costing you money. These band-aids are a drain on your 15% more. Each of these band-aids take money and manpower to manage and many take a cut right off your 15% more. The band-aids cost you money and the unpaid A/R costs you money.
That is why I decided to write a book. Most businesses don’t manage their accounts receivables because they don’t know how. Nor do business owners know how to hire someone to manage them. I’ll cover that another time.
The chart below gives you an example of how aging receivables cost you money. And, that is just the tip of the iceberg.
What could you do with 15% more from your business?