🎯 How to Take Control of Your Revenue Management
🎯 How to Take Control of Your Revenue Management
The steps you need to take to transform your revenue management so you're not leaving any money on the table.
You’re still sending out PDF invoices created in Word or Google Docs to your customers expecting payment, but how do you make sure they pay you on time? It’s not like you have a tracking system to know how many days your customers have left before payment is due. What about a collection policy for when customers are 30/60/90+ days past due? Who’s responsible for reaching out to your customers for payment? Have you ever done work and forgotten to send your invoice for payment after 1 month of service? Determining how often you receive payment is imperative to managing your cash flow and not feeling like you’re living paycheck to paycheck.
So, what can you do to transform your revenue management? Some of what I talk about today will seem like the same process as last week’s post on spend management. You’re correct; it is. Every process starts with documenting your current process, looking for where software can help automate some of the mundane tasks, and training relevant staff members on the new process and software. The one thing different this week is the monthly review of your Accounts Receivable (AR) Aging Report because you need to reduce how many days it takes for your company to receive its revenue.
Current Process
Update Process with Automation
Embed the new process into the company culture
Current Process
The first process of taking control of your revenue management is to document what you’re currently doing. Are you sporadically sending out invoices via email? Who’s keeping track of your customers, and who owes you? List everything you’re currently doing, and make sure to tag the employee responsible for each task. This lets you see where the company is falling short and how to improve your current process. Doing this before introducing any software will ensure the team knows exactly what the process is before adding software to an abysmal process. The software will amplify the problems you had before or add more stress to the team if the problems aren’t addressed.
Update Process with Automation
You can use software to send out your invoices, send payment reminders, receive payments online via ACH and credit cards, track who owes you on your AR Aging Report, and keep track of your customers. There’s no need to spend minutes or hours creating PDF invoices manually. That time could be spent on solving a more pertinent issue in your business. Business owners inevitably talk about the processing fees when I talk about using software to help collect customer payments. Your total processing fees will be less than the total you’ll spend trying to do everything manually. If processing fees are that big of an issue to you, then build it into your pricing.
Payment reminders can be automatically sent to each customer so they can be aware when they’re past due, and you, as the business owner, can see when a customer has viewed, opened, or paid the invoice immediately. Your accounting system, such as Quickbooks Online or dedicated revenue management software, can be used in conjunction with your current systems to provide an overall view of your revenue.
Embed the New Process into Company Culture
After implementing the new software, make sure the primary teams are experts on the new software. As a business, you must ensure that a dedicated person/team keeps track of your invoices and that all invoices are sent out promptly. The faster you send the invoices, the faster you get paid — hopefully. By embedding the new process into the company culture, you create one source of truth for all things revenue.
Revenue management is one of the most important things you can do for your business. If you can reduce the days sales are outstanding, you can replenish your cash just as fast. Managing your spend is one of the ways you can extend your cash runway, but if your revenue management is in chaos, you won’t have any cash to have a functioning business.
🔜 The next post will discuss ways to separate business and personal expenses.
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😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.
Woolichooks provides finance consulting services, including setting up finance software systems and processes to enable companies to grow.