Wells Fargo Bank says America’s small-business owners are the most optimistic they’ve been since July 2008, before the recession took hold, according to the bank’s most recent index survey it does with Gallup.

For Jan. 9-13, the index stood at 15, compared with a minus 3 in October, and two prior index ratings of zero, which indicates neither optimism nor pessimism.

Asked for their expectations about the year, the 600 surveyed business owners said they were decidedly more optimistic than in recent surveys.

In cash flow, 53 percent expect it to be good or somewhat good, up from 48 percent who stated that in the fourth quarter. And in terms of credit, 27 percent expect credit to be easy or somewhat easy to obtain, up from 22 percent in the fourth quarter.

If you are feeling up as well we can help your CASH FLOW. Call Micheal Lebovic and ask about our “Spring Cleaning” program.

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Definition: Accounts Receivable
Money which is owed to a company by a customer for products and services provided on credit. This is often treated as a current asset on a balance sheet. A specific sale is generally only treated as an account receivable after the customer is sent an invoice.

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Insert a clause in the credit application

I have advised many of my clients to insert a clause in the credit application stipulating that the owners of corporations undertake to personally pay/ guarantee any balances the company has to turn over to a collection agency or file a court claim on. Not everyone can do this but it is something that should be seriously considered.

Of course you also want references from other suppliers. Get the name and position of person giving you the information . How long they have been doing business with the applicant, at what volume and what sort of payment history do they have. Were there late payments, bounced checks, delinquent accounts?

Your prospective client will often cherry pick who they give you as a reference resulting in a picture that might not be completely accurate. So here are a few additional steps you can take.

Call around to colleagues or suppliers in the industry that you may know and see if they have any information they might be willing to share. You will be surprised how helpful others who have been in business for a while can be. Everyone gets burned sometime and the smart businessman knows that if he looks out for you someday you will be there for him.

Companies who are in the business of selling credit reports are another good place to call. A word of caution though, these companies do not always have complete or accurate histories of commercial debtors so don’t take a credit report with no bad marks on it as a guaranty there are no outstanding issues.

All of this checking can be time consuming so the amount of investigating you do should be commensurate with the risk you are contemplating taking and the size of the order.

Now you are ready to provide your goods and services knowing you have covered all the bases and minimized your exposure to the risk of bad debts and not getting paid.

Next: Using documents that help protect you

What should I be asking for?

If you are dealing with a business always ask for its full legal name. If it turns out later on that you were not given the proper name or were given an inexact name it will be your client’s problem and you may just be able to look to the owners personally for any outstanding balances and get a court judgment against them.

Get the full name of the owner or CEO, first name and last name, make sure it’s printed out and you know how it’s spelled. ( I wish I had a dollar for every debt recovery file I’ve seen where $20,000.00 worth of goods was shipped out to “Fred” at Toronto Bargain Bonanza )

The easiest way to make sure that there are no accidental errors is to also get a business card and/or letterhead and attach them to the accounts receivable file. You might even try to get owners home telephone number and address if possible. Last but not least ask for a copy of their check to confirm the banking information they give you. It is not a guarantee but the more information you have, the more secure the position you are in and the less likely you will have to get involved in any kind of litigation down the road.

Next: Insert a clause in the credit application

As we all know “the devil is in the details “ and how are you going to get those details if you don’t write them down and save them somewhere. This should be done before you even begin doing business with your client/ customer by having them fill out a credit application.You might even want to pull a credit report. I never cease to be amazed how many businesses never bother to take this step. Credit is a privilege that you are extending to your client. If you want to avoid getting NSF checks it is only prudent that you know exactly who you are dealing with and what shape they are in financially.

Next: What should I be asking for?

Whether you are running a small business or a large one, extending credit in these tough times tends to be tricky if not downright dangerous. Preparing and implementing the right collections system can be the key to shielding your accounts receivable and the survival of your business especially if you are just starting out. Not only will it help you protect your cash flow and help you avoid needing collection lawyers or commercial debt collection solutions, it will also reduce the tension between your sales departments’ “just ship it” and your credit department’s “hold that order!

Next: First things first, create a paper trail

Tough Times?
Revisit your Collections Procedures!
Ask about our free 90 plan to increase your cash flow.

Call today at +1-416-784-3770.

“I’ve been using Canadian Corporate Legal Services for so long for my bill collections I can’t remember when I first starting. Canadian Corporate Legal Services was recommended to me by a friend of a friend as a good “knee breaker“. Canadian Corporate Legal Services is not that at all! Canadian Corporate Legal Services is effective and professional with their receivables collections. I am not worried about them giving my business a bad name. Canadian Corporate Legal Services are above board and not slimy.”

Before an engagement of Canadian Corporate Legal Services services, we carried  on a knowledgeable conversation where all aspects of the case are disclosed and factors weighed. This is all part of his service!”

Client: Toronto Headhunter

Canadians expected to be conservative in case of credit crunch

Corinne Pohlmann of the Canadian Federation of Independent Business said access to credit is generally available for small businesses. “In fact, I would argue that a lot of businesses, including small businesses, are probably playing it conservatively right now and probably watching what’s happening and are trying to hold onto what they have at the moment,” said Pohlmann, the federation’s vice-president of national affairs.

Read more: http://www.ctv.ca/CTVNews/Canada/20111130/credit-crunch-consumer-behaviour-111130/#ixzz1gzylJC1w

If you are seeking cash to kick start the new year no matter what shape the economy is in take a good long look at your accounts receivable.  Ask yourself are you exposed and if so what are you going to do about it?