Why You are Leaving Money on the Table
And You May not Even Know It!
Do you spend time chasing your clients to collect money for services you already delivered? Worse yet, do you actually avoid, or even forget, to invoice your customers? It’s more common among business owners than you may think.
Most of us would tell someone that he dropped a $20 bill while pulling something out of his pocket – it’s the right thing to do. But when someone doesn’t ask to be paid for a service rendered, do we have an obligation to remind them to send us the bill? I used to think so, but now I’m on the fence.
In the past quarter, I had to remind four, yes FOUR, vendors that they didn’t bill me for work completed in the prior month. Three of them finally sent me a bill. The fourth one still can’t figure out when and where they did the work at one of my rental apartments. I even told one company that they overpaid ME three times, and they keep sending me more money!
These companies are leaking cash. How can anyone run a business without any financial systems? If I’m not being invoiced, I suspect other people aren’t either. Companies like these are leaving thousands of dollars on the table.
Besides being in integrity to pay what I owe, I want to manage my cash flow and reconcile my bookkeeping records every month. When vendors randomly remember to bill me, it can be a surprise. I’d rather keep on top of the money with timely invoices since I use cash basis accounting.
If accounting isn’t your Superpower, outsource those tasks to an expert. I’m a huge fan of Karen O’Connor, the Cash Flow Detective. Karen and her team do amazing work that saves business owners thousands of dollars each year. They help business owners stop drowning in financial paperwork and plug the money leaks, so you keep more of what you make.
I’ve realized that trying to do the right thing is becoming quite time consuming and exhausting. I have plenty going on in my own company – I don’t have the capacity to remind other business owners to take care of their financials.
Perhaps I should just accept these unbilled services as ‘gifts’ – and stop fighting so hard try to make things right. Maybe that’s how it’s meant to be and I should be grateful. So be it.
But for you …. I want your business to have financial systems in place. Systems that do the work FOR you so that you easily collect payments for your services and don’t leave money on the table. Companies without systems are the first to fail – and it doesn’t have to be that way.
Here are some tips to systemize your money:
- Collect money BEFORE you deliver your service when possible
- If you allow payment programs, automate the billing and collection process. PayPal and some CRM tools provide this functionality so you can set it and forget it
- Create and send invoices immediately after the work is complete – and no later than once week while the transactions are fresh in your mind
- Keep your bookkeeping up to date so you know the exact status of your cash, accounts payable, and accounts receivable
By following these tips and keeping on top of your financials, you will enjoy better cash flow and a more profitable business.
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