5 places to find the cash hiding in your business

Many of today's business owners are playing the grown-up version of Button, Button, Who's Got the Button*. Rather than trying to determine the whereabouts of a missing button, these frustrated entrepreneurs are looking for the cash that's missing from their business. They've been focused on increasing sales or managing profitability but can't seem to turn their results into cash. Maybe they've implemented cost controls and lowered their expenses, but they still find themselves running short on cash. Bills have come due, and despite positive net income in the business, they have no cash in the bank and don't know when it will arrive. How is this possible?

In many cases, the cash is hiding in plain sight. Businesses don't pay attention to the details that occur during the sales process. There are quotes, orders, and invoices leading up to a sale. There are credit checks and order limits that need to be considered, and then there are invoice accuracy and collection concerns to be addressed. At each point in the process from moving a prospect to a customer and moving a sale from a quote to an order to an invoice to a payment, there are ample opportunities for cash to seep out of the business.

In this document we'll help you start at the beginning to locate that missing cash—and then set it free. We'll share some ideas about where to look for it and then show you how the right automated system can help you stay on top of the money that flows through your system.

Hiding Place #1: The mail box

You have a ton of business, but your customers take too long to pay. Your cash might be hiding in your mail box. Every time you mail an invoice to your customer, your money sits in that letter box. Your customer can't pay because they haven't received your mailed invoice. Or maybe they have paid but they mailed the payment. You aren't going to get paid until your customer receives the invoice, writes the check, and sends it to you, so you've effectively added extra wait time on both ends of the process. Extra delays mean less available cash to operate your business. Stop letting the mail carrier determine your cash flow.

* Button, Button, Who's got the button, is a traditional children's game that involves group of children seated in a circle. One person is designated "it" and tries to surreptitiously slip a button into the hands of one member of the circle while others try to guess who ended up with the button.

Set the cash free by implementing an automated accounting solution that allows you to send invoices electronically and accept credit card and online payments. With electronic transactions, you can eliminate much of the wasted time your employees spend tracking paper and making follow up phone calls. The value of faster cash receipts, reduced collection times, and fewer employee hassles should quickly exceed the cost of bank or credit card processing fees.

Figure 1: Sage 50 Accounting: Email invoices and accept payments online

Other ideas: Turn your invoices into marketing pieces using custom invoice formats in Sage 50 Accounting. Add pictures, custom text, and special messages that make you stand out in the eyes of your customers. Consider simplifying your invoices to make it as easy as possible for your customers to pay, and if you're working in multiple countries, you can even generate invoices in multiple currencies.

Hiding place for funds: Numbered Swiss bank accounts are often used by fictional spies and villains to hide their funds. They have been featured in at least 16 movies and a number of novels.

Hiding Place #2: Between the quote and the invoice

You have plenty of customers, but you aren't making enough on individual orders. And it seems your team spends too much time on errors and corrections.

You might find your cash hiding in the gap between your handwritten quote and the printed invoice you send. If you prepare manual quotes or provide verbal pricing, you may be making mistakes and missing opportunities to get your invoices right. You might be quoting one price and selling at another, or you might be shipping a case when your customer wanted one item. With no connection between the initial quote and the final invoice and no central place to manage them, you run the risk of letting money and profits disappear from your business.

Don't let your money slip through the cracks.

Keep more cash in your business with an automated solution that tracks quotes, orders, and invoices without duplicating time and effort. Create a quote while you're on the phone with your prospect, record notes, and then save the transaction. When the customer calls back to place his order, you call up the quote, verify details, and then place the order. Once the products are shipped, the order becomes an invoice, and the sale gets recorded. Your risky manual process has now been converted to a seamless automated way to provide excellent customer service and generate more cash for the business.

Figure 2: Sage 50 Accounting: From quote to order to invoice

Other ideas: You can make the process of ordering goods and services for your business less error prone. Use Sage 50 Accounting to issue automated purchase quotes that become orders, and once you receive the goods from your suppliers, turn them into payables invoices.

Hiding place for funds: Numbered Swiss bank accounts are often used by fictional spies and villains to hide their funds.
They have been featured in at least 16 movies and a number of novels.

Hiding Place #3: In your clock

Your employees are busy providing services, but you don't seem to be covering your labour costs.

When it comes to billing customers for services, you might find that your cash is hiding in your clock. Every minute of time that goes unbilled represents cash that's flowing out of your business. When you work off a manual system, you can easily forget to charge your customers for all the time you spend on individual jobs.

It's time to beat the clock.

Turn time into money with an automated system that connects hours to billable rates using automated time slips. Ideally, you want to keep track of the time your employees spend on billable and non-billable activities and then quickly generate sales invoices. For larger projects, you need software that lets you allocate employee and contractor time between multiple projects, and then capture it for sales, and in the case of contractors, purchase invoices.

Figure 3: Sage 50 Accounting: Hours go from the clock to the invoice

Other ideas: Have employees use the time clock feature in Sage 50 Accounting to capture the time they spend on individual client projects.

Famous historic hiding place: Danby Hall, Yorkshire. A secret room was used to hold weapons and other supplies by the Jacobites for the uprising in 1745.

Hiding Place #4: In that stack of uncollected invoices

Your team is making plenty of sales, but collections are out of control.

Your cash is hiding in that stack of uncollected invoices. Collections can quickly get out of control when you have a hard time finding customer phone numbers, determining unpaid balances, or tracking customer shipments. Poor collections can also be the result of bad credit management in the sales cycle; you need to establish individual credits limits and review every purchase against those limits. It's tough to manage collections when you're using a manual system.

Collect the cash you are due with an automated system that stores customer credit limits and validates every sale against those limits. Once the sale is approved, you need easy access to reports and pertinent customer details – including notes of customer conversations. And you need to be able to generate follow-up emails directly from the individual customer screen. With good insights, you can keep on top of customer payments and reduce the likelihood of having to write off uncollectible accounts.

Figure 4: Sage 50 Accounting: Customer details are all in one place

Other ideas: Use Sage Customer Pre-Authorized debits to completely eliminate the need for customer collection calls.

Movie hiding place: The freezer. Violet hides her cash in the freezer in a scene from Coyote Ugly.

Hiding Place #5: With the taxing authorities

You're charging your customers the wrong amount of tax at the point of sale, so you're losing cash in the form of audit assessments and penalties.

You're making sales and applying a tax rate to compute taxes due. But how do you stay on top of rate and jurisdictional changes? And even if you manage to file your tax returns and remittances on time, you run the risk of undercharging customers and having to make up the additional tax due in an audit assessment. Stop taxing yourself by wrestling with compliance issues.

Apply and collect the right amount of tax with an automated system that manages sales, computes the correct rates of tax by customer and item, and accumulates taxes due for reporting and return filing purposes. Trying to manage the complexities of local, provincial, and federal taxes manually is a full time job; automation can make the task manageable. You need electronic updates and powerful tools.

Figure 5: Sage 50 Accounting: Collect the right amount of tax from your customers

Other ideas: Subscribe to Sage Business Care to stay on top of rate changes, product updates, and feature enhancements that can make it easier for you to keep up with changing tax rules, rates, and regulations.

Stop playing games

You don't have time to play games. You need to take control of the cash that's hiding in your business. Start by shortening the time between shipping products and receiving payment, tightening up the flow of transactions from quote to order to invoice, and capturing all of the billable hours that are being spent serving customers. Then improve the collection process by enforcing credit limits and keeping customer data all in one place. Finally, ensure you're collecting the correct amount of taxes from your customers so you can avoid having to pay additional amounts as audit assessments.

Let Sage 50 Accounting help:

  • Generate electronic invoices that get emailed and paid online.
  • Create estimates and quotes, and then convert them into invoices.
  • Track the time you spend on tasks, and then create invoices.
  • Make customer collection calls using information that's all in one place based on customer credit limits that are automatically monitored.
  • Calculate sales tax on invoices, create tax reports, and then pay the authorities online.

 

Sage 50 Accounting manages the details so you have more time to devote to building relationships with your customers. Stop looking for that button…and transform your business into a cash cow.

"The simplicity of Sage 50 Accounting is a clear advantage for AJR Windows. We are a small business and don't have a huge amount of time to dedicate to our accounting needs. The software takes care of my invoicing and billing almost automatically—it's never let me down and I can feel comfortable focusing my limited time on other business endeavours."
— Leanna Papadopoulos, AJR Windows, Ltd.

This material is for general information purposes only. As market conditions are subject to change, the information contained herein shall not be interpreted as any commitment from Sage or as financial advice. Please consult with a qualified financial professional if you have questions about your specific circumstances. Sage makes no warranties, expressed or implied, in this material.

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