Arnon Dror is a successful businessman in the world of international finance. In many prominent companies, he has been successful in discharging the post of Vice-President. These include Xerox, Creo Americas, Scitex, Kodak Creo Inc., and Presstek. In almost all of these organizations, he has been able to turnaround their fortunes.In fact, the illustrious career of this University of Hebrew graduate spans 20 years. Many of these colleagues and contemporaries say he specializes in many diverse fields. These include IT systems, international taxation, cash flow management, internal controls, ERP integration, and corporate mergers. Currently, he works as Senior Operation Executive for Janus Technologies.
Arnon Dror – How can startup entrepreneurs improve their businesses’ accounts receivable collection?
This financial expert explains start-up entrepreneurs spend most of their time finding ways to boost their sales revenues. They assume it is the only viable way to increase their bottom-line profits. While they aren’t wrong, they fail to understand an important factor. Profits aren’t the only indicator which measures the success of their businesses in the marketplace. They also need adequate cash at all time to conduct their commercial activities without any hindrance. There have been many instances where highly-profitable companies have gone bankrupt after experiencing a cash crunch. These young proprietors obviously don’t want to find themselves in such a situation. This is why they also need to focus on streamlining their concern’s accounts receivable collection.
He further adds mismanagement of account receivable collection is a common problem for start-up entrepreneurs. Extensive research in this area reveals a startling fact. These businessmen sometimes have to wait for 90 days before receiving payments on their outstanding invoices. This put immense pressure on their cash flow position. They find it very difficult to meet their operating expenses and obligations to their creditors. It is not surprising they end up experience a cash crunch situation. Fortunately, there are ways in which they can reverse this trend. For this, they need to streamline their entire account receivable collection process. It involves implementing the following two important tips:
- Revamp their entire invoice process
This is the first and most important step which start-up entrepreneurs need to take. After making credit sales, they should immediately raise invoices on their customers. These documents should be very clear, concise and contain all the relevant details. Such information should include the sales date, product description, per unit cost, quantity and price payable. The terms of payments and due date of payment on such documents shouldn’t open to interpretation. These businessmen should also be open to sending such paperwork via email when the need arises.
- Scrutinize and change the terms of payment
Start-up entrepreneurs need to make an account receivable aging report of all their customers. This helps to distinguish the genuine ones who pay their dues on time from the slow-paying category. They should introduce a system to rewards those clients who clear payments promptly with special discounts. At the same, the mechanism should also penalize those who don’t. These businessmen could also consider changing their billing cycles
Arnon Dror says streamlining the account receivable collection process is a necessity for start-up entrepreneurs. It can long a way of improving their business’ cash flow position. This enables to conduct their market operations without any hassle. Implementing the above two important steps can help them achieve this objective.