Category: Small Business

The Power of Numbers

By , June 9, 2009

If only every project and every client were as memorable as when you start your business with a new manila folder, proudly bearing the first client’s name!

Over the years you rely as much on your memory as your filing system for the details: client names serve well until Mr. Smith has a second project and another manila file with his name on. Heaven forbid a new Mr. Smith comes to you! As the papers and old projects pile up, your project management system becomes clumsy.

The use of a year number and – “one up” project numbering system (e.g. 09-123 ) can make project management run more smoothly. The year gives you a range to tie into, especially useful for a large number of projects ( saving you from the grand search of every piece of paper you ever wrote on ! ), and the number gives each project a precise, unique and logical place in your filing system.

The all important “Project Reference list” should always be handy.

It can show as much or as little additional information as you may need, but your project list should at least show who you worked for, and probably what the project was. This list allows you to add new projects and can highlight projects “in progress”. Once a project is completed and filed away, the number system make it  snap to find again. This list, if you keep it properly, can be used for quick reference of : current workload, jobs on hold, jobs of a similar type, jobs from the same client, payments outstanding, billing details, even market trends. In fact you can tag the reference list with columns for any criteria you find significant. Make the reference list a spreadsheet – this lets you sort he information however you want. Your computer will love you for using numbers instead of characters! Create reports of projects in a size range, client range or billing range. Once the data is input, the need to retype it for every report is eliminated.

Every filing system has its drawbacks. The anonymity of the project number, while giving added security if you need it, is also impersonal. Always remember to use the client’s name and or company name on all correspondence. It is also a good cross-reference check of your system..

In a numbering system, the numbers are FREE.

Use them as often as you want – it is better to assign a free, unused number than to lose information because you didn’t file it properly. A change in project number can be used to signify the end of a project phase. This information can be used in billing, especially if many people work on a single project.

Mr. Smith expects you to know him immediately!  If you make revisions to an existing project but intend to keep the previous version, use a new number. A client can pinpoint the version he is looking at when you are on the phone by referencing your project number. “Project 93-456, on the front” is a lot easier to look up than “On the front of that job you did for me a couple of years back.”

The use of a number system requires some commitment

It is important to write the appropriate number at the top of EVERY item of paper in your files, check that the correct number is referenced on your papers and especially on contracts; use it in naming associated computer files for graphics, videos, research notes – everything that goes with the product. One thing to watch for carefully – Use of an incorrect number or no number used will quickly cause chaos; overwriting computer files or copies of documents not where they were expected.

Don’t be tempted to spend more time managing your system than working!

If you start a new numbering system and intend to incorporate existing data and plans, make sure you leave enough numbers before the one you start with – but don’t be tempted to stop work to catalogue. Assign numbers to the old files only if you use their information. This system is designed to increase efficiency, not create extra work for you.

In our digital age, everything is becoming numerically based. Alphabetical filing systems are limiting. The numerical system grows as fast and as far as you do.

Make the Power of Numbers work for you!


© 2009 Jackie Barnaby All Rights Reserved

The Check is in the Mail

By , June 3, 2009

Dealing with collections is probably the least popular part of running a business and also the part you have had the least training for.

Often, everything goes very well with a client until the time comes to be paid…How do you ask for the money?

If, after 30 days, or whenever you agreed to be paid, they still owe you money, your client is not such a good bet. But now is not the time for YOU to be embarrassed. Unless you are less than certain that your services were worth what was agreed, you should be able to ask for money confidently.

Never be embarrassed to ask for money that is owed to you!

The key to effective collections is confidence. If you are confident that you provided value for what you billed, you can ask for payment with a clear conscience.

Many people have an aversion to discussing money: almost as though they are running their business for the love of it. That is the definition of a hobby. To be a business, you must at least try to profit from your efforts (Just ask the IRS!). Collecting money that you have earned is a part of business. Nonpayment is not a personal sleight, and neither is collecting it.

Avoid collections from the start

Collections are time-consuming, rarely generate new business and can in fact become very costly. Avoiding the problem altogether is the key – Revise your sales strategy!

At your initial meeting you will try to determine that your client needs. Make sure your requirements are understood just as clearly – and that all of the bargaining is completed.

Don’t begin work on any project that has been poorly defined, and for which all the payment details have not been discussed.

Payment on delivery is an excellent way to avoid receivables and collections.

Some businesses are better suited to this method than others – there needs to be tangible evidence of the work you have done and a definite time when the service is complete or the product is handed over. (Consider billing separately for services and for products)

If you expect “payment on delivery” terms, make sure your client understands from the beginning, or you may be working for nothing.

When you let your client know that your job (or a part of it) has been completed, be sure to have an invoice drawn up and let them know the exact amount you expect them to pay.

Before you meet to hand over your work, e-mail or fax an invoice. You can discuss it if you need to but no-one will be surprised when you meet. This slightly bolder approach avoids the “ . . . . I wasn’t sure how much to have the check made up for.” excuses! (As a side note – clients who only write checks on a certain day of the week should not expect to receive your products on other days unless you agree to it)

If you deal regularly with clients who love to negotiate everything – negotiate before the work begins.

Never try to negotiate payments after work is started. (Be prepared – your final price must be acceptable to you to ensure thorough, professional efforts on your part.)

  • If you reduce the price, cut out some of the service: or you are admitting to your client that your first price was inflated.
  • If you discount your service for regular or volume clients, make sure they are aware of this, and be sure to remove the discount for irregular payers.

If payment on delivery is unacceptable, any other terms should be agreed to in writing.

Keep very good records. A signed contract is best, but written details of actions you have taken are always more reliable than your memory, in the event of problems down the road.

Don’t let other people tell you how to run your business, especially how much to charge. If you do, be prepared for the consequences – if they decide what you’re worth, they may as well decide when you should be paid.

Make sure that both sides are clear about what is in the contract. Small print is wonderful for saving paper in printing, but a clear understanding of all the facts will avoid problems on both sides. If a deposit is taken, be especially clear about whether it is refundable, and how and when it will be applied.

Don’t accept postdated checks: if the money is not available when the check is written, you cannot be sure it will be available in the future.

When You HAVE to Collect:

First, be absolutely sure that you are owed the amount that you are expecting to be paid. Be sure of both the exact amount and of the agreed payment date. Check all of your records. Then, consider the costs of collection. A small amount is probably worth chalking up to experience. Every business must decide what they consider to be a “small amount”. Close the loophole the next time and concentrate your efforts on debts worth collecting.

It is up to you what is worth collecting, but your efforts are intended to bring in money, not to make a point at all cost. Never be petty – collecting the last $5,  just to make a point, will be remembered a lot longer than your outstanding service.

It will be very hard to collect a debt you have ignored for three months because you felt uncomfortable about asking. Be methodical. Don’t ask for money early from a currently paid up client when you have six overdue accounts that you have been too shy to approach for months.

Always take the actions toward collection that were in your contract

If you said you would go to an attorney, do it. If you are not prepared to follow through, don’t put it in your contract in the first place.

All collection methods have their advantages and disadvantages

Not all collection methods will be appropriate to every situation. But, any attempt will have a better chance of success than just hoping someone will pay you.

There are four basic methods:

  • A person is very difficult for most people to ignore, especially in their place of business. Collecting in person can be very effective but it can also be time-consuming. Catching your debtors with “cash-in-hand” is also often difficult.
  • Phone calls are very good for the gentle reminder. There are specific restrictions regarding how often you can call which vary from state to state. The diversity of excuses is incredible! Document them all – in later life you can write a book! If you are lucky enough to receive a payment commitment over the phone, write a letter to confirm this and send it immediately to your client.
  • Mail/e-mail collections are the easiest for the timid collector and are also useful for documenting your activity in trying to collect the money. Unfortunately, mail is also easily ignored in the flurry of junk literature we have all become accustomed to. If you need documentation (e.g. for possible legal proceedings) send all letters by “certified mail, return receipt requested”. It is your only proof of having sent the letter and that it was received.

  • Third Party collections – by collection agencies or attorneys are often effective and the most objective method, but this route is costly.

Going to court is not a guarantee of being paid, (even if you win) but you will definitely have bills of your own to pay as a result.

No matter how much you love your work, what you do has real value – When your client first came to you they expected to have to pay. A firm and systematic approach to collecting money means that you can spend more time on new projects, and less time in tying up the loose ends of old ones.

Receivables are your funds that someone else has. Go get ‘em!


© 2009 Jackie Barnaby All Rights Reserved

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