Find a First Bank location near you. Search branches and hours, ATMs and more.Find Us
Enjoy an improved online experience, better app and more security with new Online & Mobile Banking.Learn More
Reach out to if you have questions, are looking for assistance, or would like to share feedback.Let's Connect
Make progress toward your goals and uncover the loan that fits your business by partnering with us.Learn More
Apply for your next home loan online 24/7 and enjoy quick, local service for your next mortgage or refi.Apply Now
Turn to us when you need flexible access to capital, new equipment or real estate for your farm.Learn More
Congratulations, you survived the roller coaster of the building and growing your business. It’s important to continue with a growth mindset, however, today’s business environment requires constant reinvention to stay competitive. As you enter the Manage for Profit or maturity stage of your business life cycle, cash flow and profitability create a solid foundation. From a track record of annual growth to loyal employees and predictable revenue, this is the time to acquire other businesses, introduce new product lines, or consider selling the company to investors. Here you’ll find articles, guides and tools to help you avoid complacency in your success and stay vigilant for other opportunities or signs of trouble.
One of the most important aspects of managing a business is the collection process of money owed. Businesses often prioritize sales and extend credit to customers without properly managing that credit. This can lead to a longer collection cycle, which ties up working capital that could be used elsewhere in the business. Establishing an effective credit system will increase the business cash flow, as well as reduce the risk of loss from the late or non-payers.
The first step in developing an effective credit system is to establish a clear, concise credit approval process. The responsibility for granting credit should be determined. For smaller organizations, this usually rests with the owner. A best practice would be to obtain a background check and credit history for all new clients. It is always best to know some information about the customer before extending credit. In addition to this, a regular review of the credit policy will help identify any changes in risk profiles of your customers. Look for any changes in buying or payment patterns. This may indicate a change in credit worthiness or potentially fraud. If you do not want to allow customers to carry a balance on account with you, you should look at offering other payment options, such as debit or credit card and mobile payments.
If you allow customers to carry a balance, maintaining accurate customer records is key. This will help to make the process more efficient by having current contact information and accurate information for the invoicing process. This will include the correct data such as pricing, volume and terms. Any errors in this information may slow down the collection process. Managing the collection process will be easier if the system is automated. Most accounting systems have the ability to manage receivables and make the process more efficient. Reporting from the accounting system will help to identify risk in the credit process or with certain customers. It is important to monitor the timeliness of the collection process, as a delay in this will tie up working capital that can be used in other areas of the business.
In the instance that a debt goes past due, the collection process will become more labor intense. The best method to collect payment is face to face. However, if a customer has difficulty paying, it may be best to communicate with a written agreement for a payment plan. A collection agency may also be engaged to collect payments, however, that may impact any ongoing client relationship. Of course, legal action is a last resort, but sometimes necessary.
Maintaining a robust accounting system will help to manage the cash in the business more efficiently and avoid unnecessary collection efforts.
First Bank does not provide, and is not responsible for, the product, service, or overall website content available at a third-party site. First Bank neither endorses the information, content, presentation, or accuracy nor makes any warranty, express or implied, regarding any external site.
Our privacy policies do not apply to linked websites. You should consult the privacy disclosures on any linked site for further information.
Thank you for visiting our website.
By clicking Continue, you will be directed to First Financial Services.
Your security and privacy matters at First Bank. Before you send us an email, please be sure that you are not sending confidential or personal information – like your account number or social security number. If you need to share this type of information with us, please call us at 1-800-538-3979.