Seven sizzling tips revealed.
Accounting executives were already pushed to the brink by a weak economy, skyrocketing gas prices eating into profitability and the effects of a declining housing market. So, when the stock market started playing games, focus on the bottom line intensified.
Seven Sizzling Tips
Here are seven strategies that your organization can use to improve profitability. While none by themselves will result in a bottom line home run, they are all definitely singles.
- Look for deposits given to companies you no longer do business with. Many "forget"; to return them when the relationship terminates. The most common are telecommunications and postage. And, while you are at it, make sure you are using all the telecommunication lines and features for which you are paying.
- Look for unclaimed property belonging to your organization. Go to www.missingmoney.com and enter your organization’s name including any variations used. Do this in both your state and other states in which you currently have or have conducted business in the past. Caveat: If your organization does not report its unclaimed property, think twice before putting in a claim. While states indicate there is no checking of the returns of claimants against those reporting, recent experience in several cases shows that might not be the case.
- Increase frequency of sending out invoices. Ideally you should bill every day. The practice of having your Bill Date equal the Shipping Date will improve your cash flow 15 days, if you have the standard 30-day terms. If you can’t invoice daily, consider a move to weekly.
- Start your collection calls sooner. If you typically wait 30 days, move it up to 15 days. In many paying organizations the squeaky wheel gets paid faster.
- Pursue ACH payments in lieu of paper checks. This should be done on both sides of the equation. Since ACH (Automated Clearing House) payments are cheaper to create and process than paper checks, they will improve your cash flow on the receipt side. Be aware though that this move can have a negative impact on the payment side if you don’t renegotiate payment terms. Many organizations arrange an increase of two-to-three days to make transactions float neutral.
- Avoid the stretching payment trap. Many organizations think they can improve cash flow by simply stretching payment terms. While this would work in a perfect world, the reality is that when payments are delayed a second invoice gets issued, and a small percentage of those invoices get paid twice. The other reality is that few customers return those second payments unless contacted by the payer. Thus, the savings from the stretching are given back, sometimes many times over, by the duplicate payment issue.
- Make sure your organization doesn’t make duplicate payments. This is not as easy as it may seem. Many executives believe their organizations never make a duplicate payment. To determine if your organization has the potential for duplicates use AP Now’s duplicate payment diagnostic and then address the areas where the diagnostic indicates you have the potential to make duplicates.
As you can see, the above tips are not beyond the reach of anyone reading this. While ensuring you follow these tips will cost you nothing, they will have a significant impact on your profitability. And, in this environment, no one can afford to let even a few dollars slip from their bottom line.
|Rate this article 5 (excellent) to 1 (poor).
Send your responses here.
Mary S. Schaeffer is the author of over a dozen business books including The Controller & CFO’s Guide to Accounts Payable (2007 John Wiley & Sons) and the just-published Fraud in Accounts Payable: How to Prevent It. She serves as the editorial director of Accounts Payable Now & Tomorrow, a newsletter for professionals interested in payment issues, writes a free weekly ezine e-AP News and directs the organization’s consulting practice. You can read her thoughts on timely payment issues on the AP Now blog.