A couple of weeks ago I started with a new client and he kept on mentioning how tight he was on his cash flow. I asked him how his A/R (Accounts Receivable) was and the look in his eyes was like a deer caught in the headlights.

Not managing you’re A/R has a massive impact on cash, but what does this have to do with time management. Well the old adage that “Cash is King” is true, but once you read this article I think you’ll see it more like “Time for Cash is King”.

Here is where we found gold for time with his A/R:

We took his A/R report and found that there was almost $200,000 outstanding in unpaid invoices. The average days outstanding were 60 days. Once we applied the strategies below we found out that he was able to make approximately $3200.00 per hour.

Take a look at what we did…… .and No You Don’t Need to be a Mathematician.

1st: We determined how much each day of A/R was worth. $200000/60days = $3333.00/day

This means every day we can bring our A/R by a day we have $3333 in additional Cash!......No Magic Tricks!

2nd: We set a goal to bring it in by 12days and we did it……..this brought in $39996.00 in extra cash. But that’s not the biggest win……. How much was his time worth?

We applied five strategies which took 5 hours in total to complete. 5hrs bringing in $39996.00 means his time was worth $7999.00……. Not Bad Eh?

Here are the 5 Strategies we applied…… that you can apply as well:

Bill your customers right away:

Every day you wait is another day without getting paid. Put systems in place and delegate this task if you can, to get the task completed. He was sometimes billing a week late.

Setup a Payment System:

Create a schedule for collection of payment if you are not in the business of collecting payment right away. He had to get beyond his “But”….“But I’m too busy”, “But I don’t know where to start. Stop using your “But” as an excuse.

Run an Accounts Receivable Aging Report:

You are not in the business of lending money, but in making it and getting paid. Print your account receivable report every month or if you are in a cash crunch then every week, so that you can know when you need to initiate stronger collection methods.

Create Scripts for Delay in Payment:

A separate script for the 1st phone call, the 2nd phone call, the 3rd call that goes with an email or letter and a 4th script and letter to inform them that it is going to a collection agency. He has now delegated 80% of the A/R process…..because he has a process now to delegate.

Applied Electronic Funds Transfer (EFT):

This system will help you to get payments faster and let your clients credit card be the bank not you. His clients have been telling him how much they like this because it’s been easier for them.

It is important to have time management in your inflow of cash so that you can pay off your accounts payable and have cash flow running through your business.

Cheers to your success!