Seasonal businesses are tough. One storm can make or break your entire season. For example, a cold snowy winter could be great for a ski resort, while retail stores might suffer if consumers cannot get out to shop.
The effects of the season can also be seen on your cash flow. A warm winter could mean more work for a contractor, but wreak havoc on the sales of a snow plow or home heating oil company.
If your business is seasonal in nature, do you have a plan to keep your cash flow steady in the slow months? Many companies trim operations, lay off staff or temporarily shut down. Some smart companies diversify their operations such as the heating snow plow company that takes on landscaping work, or the home heating oil company that starts an air conditioning division.
What about using the down time to chase down some delinquent customers? You have done the work, and you deserve to be paid for it. You may just have the answer your cash flow problems right in front of you – in your aging accounts receivables!
Here are some steps to take to recover money owed to you:
• Take a look at the aging of your receivables. Start with the 30-day late customers first. Offer a small discount for prompt payment in full. Make sure to mention that the discount is a limited time offer, and that it is for full payment only.
• Draft a collection letter and send it along with a copy of the invoice.
• Call delinquent customers and talk to them. Very often, people are embarrassed to talk about money they owe. Some people just need to know that you will work with them. Make it easy for them to pay you by offering payment plans. Be certain to document all payment plans.
• If you still have no response after writing and calling, consider hiring a collection agency. Find a collection agency that fits your needs. Most agencies work on a “no fee until collected” basis, so you have nothing to lose.
Put the money you have already earned to work for you. It will warm up for cash flow, and heat up your business!