𝐓𝐡𝐞 𝐒𝐪𝐮𝐞𝐚𝐤𝐲 𝐖𝐡𝐞𝐞𝐥𝐬 𝐆𝐞𝐭𝐬 𝐭𝐡𝐞 𝐎𝐢𝐥...
𝑶𝒏𝒆 𝒐𝒇 𝒕𝒉𝒆 𝒃𝒊𝒈𝒈𝒆𝒔𝒕 𝒐𝒃𝒔𝒕𝒂𝒄𝒍𝒆𝒔 𝒕𝒐 𝒆𝒇𝒇𝒆𝒄𝒕𝒊𝒗𝒆 𝒍𝒆𝒂𝒅𝒆𝒓𝒔𝒉𝒊𝒑 𝒊𝒔 𝒍𝒆𝒂𝒓𝒏𝒊𝒏𝒈 𝒉𝒐𝒘 𝒕𝒐 𝒃𝒆 𝒕𝒉𝒆 𝒔𝒒𝒖𝒆𝒂𝒌𝒚 𝒘𝒉𝒆𝒆𝒍. We have all heard the adage but how does it apply to business and why is it important?
𝘛𝘩𝘦 𝘮𝘰𝘴𝘵 𝘯𝘰𝘵𝘪𝘤𝘦𝘢𝘣𝘭𝘦 𝘱𝘳𝘰𝘣𝘭𝘦𝘮𝘴 𝘢𝘳𝘦 𝘵𝘩𝘦 𝘰𝘯𝘦𝘴 𝘵𝘩𝘢𝘵 𝘨𝘦𝘵 𝘵𝘩𝘢𝘵 “𝘨𝘳𝘦𝘢𝘴𝘦”.
In business, accounts receivable is incredibly important to every business and maintenance of operations. We can’t buy materials, order supplies, pay subcontractors, process payroll costs etc. without accounts receivable getting collected.
Some of the important things in becoming the squeaky wheel or developing a methodology of becoming the one that gets the grease is:
1. Create a routine – 1x a week print out the A/R report and review it
2. Don’t wait 30 days to start collecting – send stmts around 25 days outstanding
3. Beyond 30 days start being SQUEAKY
4. Know what the business’ DSO ratio is – days sales outstanding (Avg # of days to collect on invoices)