A recent New York Times story on the Chicago boutique “Jake” reminded me of one of the most important lessons in owning a business. It may seem like your vendors and customers/clients are friends, or at least close associates - who would never dodge your calls, or pay their bills. With the economy still in a spin, it is more essential than ever to start early on collecting receivables.

Inevitably stores, business, and vendors are going to close. While it is part of doing business - you can hep minimize the impact by being the first company to get paid what is due - before they file for bankruptcy. Once they do that, they are protected under law, and it is out of their hands who gets paid and when. I know it is often unpleasant, and you feel like you are bothering people - but if you don’t do it, someone else will. Follow up on receivables - as my business partner said - call before its due and say “just a friendly reminder, your invoice is due..”

Small Business Tip - if you aren’t personally responsible, perhaps offer an incentive to whomever in your organization does this. Give a small cut as a bonus in the same way you would a sales incentive if they bring in receivables early or on date. On the other side of things - when establishing a new customer, charge them COD for the first couple orders to establish a relationship.

Know your cash flow limits, take deposits, and for heavens sake… be careful who you work with.

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