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The New Rules of Financial Management

Mary Ann Reilly Sr. VP, Customer Marketing & Experience, American Express OPEN Recent Posts

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February 5, 2010

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“When a customer is ready to pay, then using ...”

Marc Spangenberg

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For the American Express OPEN Women's Business Summit, I was asked to share some insights on how business owners might improve their financial management and boost their bottom lines. The following are a few suggestions, but I also wanted to take this opportunity to invite your input into what financial questions or topics are most pressing to you.

Create Efficiencies in Accounts Receivables
We know from the Fall 2009 results of the American Express OPEN Small Business Monitor that 60% of the entrepreneurs surveyed are experiencing cash flow issues, with their biggest cash flow worry being the ability to pay bills on time. In a down economy, customers can take longer to pay you, and this can mean less available cash to pay your own bills.

Creating more efficiencies in your accounts receivables – such as through expedited invoicing and electronic payments – can help you get paid faster. Using an automated invoicing and receivables solution, like OPEN’s AcceptPay, can help with both creating those efficiencies and managing customer relationships. AcceptPay, for example, allows you to accept electronic payments via a charge or credit card or ACH (e-check), in addition to paper cash or check. This will not only become critical as more and more businesses move toward electronic payments, it could also be a selling point to potential customers who may appreciate having that option. It also benefits your bottom line by limiting your exposure to late payments.

Maximize Your Payments
Using a charge card to pay your own bills can also help boost your bottom line. A charge card can give you the flexibility to float a purchase over a period time, and some cards, like OPEN’s, can help you save money. For example, with the Plum Card, you can earn a 1.5% discount if you pay your balance within 10 days of that month’s statement closing date. Also, if you use an OPEN Card, you can enjoy discounts with companies like FedEx, Hyatt, Hertz, Constant Contact, and Epson through OPEN Savings. Plus you may also be able to earn Membership Rewards, which you can then redeem to pay for expenses like travel or gifts for clients or employees.

Be Proactive with Financial Services Partners
The economy has increased the importance for business owners to take certain, proactive steps toward building more flexibility and security into their businesses. Establishing access to credit, even though it may not be currently needed, can help when surprises arise. It’s better to secure the credit early, because when you really need it, your business may not appear as attractive to lenders.

You can also be proactive in developing close relationships with your financial services providers, letting them know in advance of the changes that may affect your business. For example, if you see that customers are taking longer to pay you, your providers may be able to work with you to identify potential solutions before you miss payments.

If you have any questions or suggestions for additional topics, please leave a comment below or e-mail me at maryann@openforum.com. I also encourage you to visit the American Express OPEN Women’s Business Summit Web site to learn more about the event, taking place Feb. 17-18 in Dallas, and the speakers, which include Gail Blanke, Founder and CEO of Lifedesigns, and my colleague Sophia Lundberg, Vice President of Marketing, American Express OPEN.

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Marc Spangenberg 1 year 10 months and 14 days ago

When a customer is ready to pay, then using one of the methods in AcceptPay is an ideal solution. In the case of an invoice issued Net 30, a customer will refrain from making payment until required to by the terms of the invoice. It is now possible to accelerate the payment by monetizing Accounts Receivable for about the same fee as using a credit card. Additionally, the business that offers attractive terms to its customers will gain market share relative to those that don't. Taking the concept a step further, a merchant can negotiate discounts from suppliers because they have received early payment from customers by monetizing their A/R. Merchants in the B2B environment can gain the increased cash flow enjoyed by businesses in B2C who accept credit cards for payment.
Julie Rains 2 years 0 months and 0 days ago

A bonus of the e-check/ACH transaction can be a reduction in bank fees as the processing is much simpler and less costly, in addition to being faster. Customers can also manage their cash more precisely rather than waiting for a check to go through the mail and then get processed; they can still delay a payment but it should be more obvious to everyone when the check has posted.