When the University of California, Los Angeles‘ research funding more than doubled over a 10-year period, they knew, without a doubt, that this was going to put tremendous pressure on their research staff. Unfortunately, the Provost of the school, Scott Waugh, had been receiving multiple complaints about their admin staff. They were experiencing many issues, including past due invoices. Knowing they needed to fix these issues to remain competitive (and keep up with new demands), UCLA took a smart step and enlisted help. And it’s safe to say help was certainly received. After calling in the Huron Consulting Group, UCLA saw incredible improvements with their research administration. Just take a look at the case study here. Be sure take note of these two important figures:
– 70% decrease in past due invoices
– Cash flow improved by $35 million
Wow! Although a multi-year project, just by working to alter their infrastructure and create more efficient processes, UCLA made extraordinary changes to their financial management (among a multitude of other things, of course). As a small business owner, you don’t necessarily need to call in a large consulting group to help you get a handle on past due invoices, but is important to learn from success. Take a look at how you can use the process Huron Consulting and UCLA conducted to start battling past due invoices and slack financial management.
How the UCLA Research Administration Decreased Past Due Invoices (and How You Can Too!)
1. Identify the Goals – Positive is a much better foot to start on than negative. Instead of jumping immediately to what needs to be fixed, focus on what you want to see accomplished. Huron began it’s work with UCLA with 3 goals. Keep this same approach. What do you want to change about your small business financial management? Do you want to get paid more consistently? Faster? Do you want to find a way to better monitor payments? Increase customer communication? The list is endless, but you must first identify WHY you are going down this road. What is it you want to achieve? Make a list and move forward.
2. Get to Know the Problem – “Customers keep paying me late” is not a specific enough problem to act upon. It’s time to get acquainted with what’s going wrong. After jumping into working with UCLA and identifying goals, Huron spent months just getting an assessment of the organization, trying to get to know every detail of how it was run. They had to know how things worked before they could aim to make it better. You can do this for yourself (and your past due invoices) on a much smaller scale. Which customers are paying you late? How have you tried to contact them? How are on-time customers paying you? How do you vet customers before extending them credit? How do you invoice? Accept payments? Write down every single step of your credit process, from how you initially extend net terms to how you follow up with late payments. Seeing what you are doing now (that doesn’t seem to be working) can help you be more specific about where you can improve.
3. Identify the Solution – Now, just as Huron used their organizational assessment to create recommendations and solutions for UCLA, do the same for yourself. Identify your weak points by going through your entire credit process and past due invoices. Are you being too free with net terms? Should you better vet customers? How easy is it for customers to pay you? Should you look at offering online payments? Are you following up immediately with late accounts? How can you implement a system that will allow you do so? Step by step, write down how you can improve what you are doing and further streamline your process. You can follow this easy guide to receivables management to make you sure you aren’t missing out an any opportunity to improve.
4. Give it a Try – Huron began immediately assisting UCLA with implementing these recommendations. You shouldn’t waste anytime either. Once you’ve identified HOW you can improve, act on it! Hold yourself accountable and if you have other team members you can make part of the process, get them involved. Work together to help streamline your receivables management and get on top of your past due invoices. Also, be flexible. Take note that your first solution might not be the best. Learn how to try things, figure out if they are working, and if not, seek another solution. It’s all about trial and error, but that constant effort to try will be what helps you see change.
5. Keeping an Eye – A huge part of UCLA’s problem came from their research administration not having the right tools and technology to do their work well. In today’s world, this should never be the issue. As a small business owner, you have so much at your finger tips that can help you stay on top of past due invoices. Make sure you are using an accounting software that you love. If not, shop around. There is accounting software out there for every type of business. But what do you do after the invoice is sent? How are you tracking customer communication? Make sure you have a great CRM software that will help you keep a clear eye on what is going with a customer and keeps everyone on the same page. Also, there is no reason you shouldn’t be accepting online payments. Look at way to make these available for your customers. Having the best software for each step is going to help you keep an eye on your payments and make a better evaluation of what’s happening. Don’t keep yourself from having this advantage.
6. Get Outside Help – The best lesson you can learn from the UCLA research administration is that sometimes, outside help is just what you need. Just look at what it did for them! And a consulting firm may or may not be the answer for you, depending on the size of your business. However, if past due invoices happen to be the issue, consider calling in a collection agency for past due invoices. Although always the last resort, they just might be what you need to get paid. Just be sure to ask the right questions when shopping for an agency, so you know you land with one you can trust! Also, explore new innovations out there for your financial management, such as receivables management software. Turning to the experts, to the people who know how to decrease your past due invoices, is always a smart business move.
As a business owner, inspiration can come from many unusual sources, just like a research administration! The key is to always be open and always be listening. You can learn great things from others’ success, even those you least expect.
Image via Shutterstock