7 Ways to Avoid a Cash Flow Crunch

Dodging these pitfalls can help your small business finances

Mistake #5: Not having documentation as proof of the debt when someone doesn’t pay This could be a bill of sale, a purchase order, or proof of shipment. A lot of companies will submit a purchase order, which will show the date, the purchase order number, and the department that ordered it. It might even include the name of the person who ordered it and what was ordered.

Mistake #6: Shipping more products or performing more services when an account is already past due “If a customer who already owes you needs to place another order, it helps you to get paid because now you can let them know that their account is on hold until it’s paid in full.”

Mistake #7: Being lenient when the customer is a friend or family member While this is a common issue that often has to be handled delicately, Dunn suggests not changing business practices for family or friends. Have them fill out the same paperwork as everyone else,” she says. For the sake of goodwill, the owner may consider offering more time to pay or a deeper discount. “You would make that clear to them so they know they’re getting special treatment.”

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