What Gets Tracked Gets Measured in Business.

What Gets Tracked Gets Measured:

Managing Unpaid Invoices for Small Business Owners. ?Unpaid invoices can be a?reality for many small business owners. When clients and customers don't fulfill their payment obligations on time, it can create significant financial stress. The key to tackling this issue effectively lies in a simple yet powerful principle: What gets tracked gets measured. In this article, we'll explore the importance of tracking unpaid invoices and how it can help small business owners regain control of their cash flow.? ?

The Cost of Unpaid Invoices? ?

Unpaid invoices can wreak havoc on your business's financial health. They can tie up your working capital, strain your resources, and can even threaten your ability to pay your own bills and employees. Without a clear understanding of the scope of the problem, it is challenging to know what next steps to take to collect the cash. Tracking unpaid invoices allows you to quantify the issue, helping you realize the true cost of late or missing payments. This awareness is the first step toward addressing the problem effectively.?

This tracking system is what I used when I worked for a small IT company that had $8Million Dollars in Accounts Receivable aka unpaid invoices. Once I organized the accounts by what was 30/60/90 days past due I successfully collected $6Million dollars in 60 days. ?I firmly believe every small business owner needs to create this for their business. It's a great organizational tool to better manage your revenue.

A Tracking System has the following Components:?

Customer Name?

Contract or Purchase Order #?

Amount of the Contract?

Services/Products Sold?

Date Due to Deliver?to Client

Invoice Date and Amount Submitted to Customer/Client?

Payment Due Date?

Sales Rep (if applicable)?

Notes?

Identifying Trends and Patterns?

Unpaid invoices are not isolated incidents; they sometimes?reveal patterns and trends. Certain clients or industries may be consistently late with payments, while others may always pay on time. Without the tracking system, you might miss these valuable insights.? ? ?

A tracking system enables you to identify which clients are causing payment delays and helps you strategize how to handle these situations. It can also help you refine your payment terms and collection processes to reduce the likelihood of future unpaid invoices. Having a clear tracking system also shows what invoice payments will be due and to set reminders in place to collect the cash if a payment is not received.? ?

Setting Clear Expectations? ?

Invoicing is a two-way street, and setting clear expectations with your clients is crucial. A tracking system allows you to monitor the history of payments from each client. If you notice a pattern of late payments, you can have a constructive conversation with them about your expectations regarding payment timing. If necessary, you and the client may need to adjust the payment schedule, so it works well for both parties.? ? This proactive approach can lead to better communication and fewer disputes, reducing the number of unpaid invoices. This approach is part of building relationships with your client and their accounts payable staff to ensure any issues are addressed in a timely manner.

?Streamlining Collection Efforts? ?

Chasing unpaid invoices can be time-consuming and frustrating. Without a tracking system, you may end up wasting resources on inefficient collection efforts.? ? With proper tracking, you can easily identify which invoices are overdue and prioritize your collection efforts accordingly. You can send reminders and do follow-up phone calls. This targeted approach saves you time and increases the likelihood of recovering funds.? ? ??

Financial Planning and Forecasting? ?

Unpaid invoices can disrupt your financial planning and forecasting. When you have a clear view of your outstanding receivables, you can make more accurate predictions about your future cash flow. This, in turn, helps you make informed decisions about investments, expenses, and growth strategies.? Unpaid invoices can pose a significant challenge for small business owners, but they are not insurmountable. The key to managing this issue effectively lies in tracking and measuring your outstanding invoices. By doing so, you gain valuable insights, identify trends, set clear expectations, and streamline collection efforts.

Remember, what gets tracked gets measured. Implementing a strong tracking system for unpaid invoices is an investment in the financial stability and growth of your small business. It ensures that you have the tools and knowledge needed to take control of your cash flow and minimize the impact of unpaid invoices on your bottom line.? ? ?? ?

To learn more about tracking systems and collecting the cash visit?bit.ly/collectthecash5tips? ?