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It pays to keep a careful eye on revenue stream

The Baltimore Sun

It's tempting to be optimistic about the level of revenue your business will generate, but the realities of your revenue stream may create an altogether different picture.

Revenues are unpredictable, and taking steps to handle that stream is vital to your business success. Sales drive your quarterly budget, but revenue is the result of sales. Experts say small businesses are susceptible to losing between 2 percent and 20 percent of their revenue. So how do you minimize these losses?

One critical area is tackling problems with delinquent payments. When making a sale, do you communicate clearly the payment terms with the customer, so he or she knows exactly when the bill must be paid? Are you requiring at least partial payment before you ship an entire order or complete a project? If not, you might find it's difficult to collect after the fact.

How do your customers pay? If you accept checks, do you have an acceptance policy that is clearly understood by workers and clients? If you receive a substantial number of checks for transactions, consider hiring a check-verification service. An electronic check reader scans the check and compares it against a database of the names of individuals who have written bad checks.

It also pays to establish and perform quality control on the process by which sales information gets captured, recorded and billed.

Consider making a collection file for each of your customers. It should contain their credit information, unpaid invoices, complete information on services or products delivered and any correspondence regarding debt payments. In a worst-case scenario, you may have to engage an attorney or collection agency to get payment from a delinquent customer so complete files will work to your advantage.

Stephen L. Rosenstein is co-chairman of the Greater Baltimore SCORE Chapter No. 3. Call 410-962-2233 to speak to a SCORE counselor or visit To send a question to SCORE, e-mail

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