“Oh, that unpaid invoice was only $1000, it’s just a bad debt expense. It’s not so much in the whole scheme of things…”
This is what a business owner, whose profits are so small that she can’t pay herself a decent wage, told me last week.
WOW! How wrong could she be about WHAT A BAD DEBT REALLY COSTS…
The real bad debt expense to your business is often miscalculated.
We can use that $1000 BAD DEBT to work out what it REALLY cost her:
Invoice value $1000
Profit margin = 10%
Profit on $1000 = $100
Remaining $900 is what it cost her to supply the $1000 goods/service
THE AMOUNT OF NEW BUSINESS she’ll need to find to cover the $1000 bad debt is $10,000!
($10,000 x 10% profit = $1000).
A recent client joined my GET PAID! Masterclass after having a bad debt expense of $6000 (the real cost to the business $60,000!)
To recoup his losses, he couldn’t pay himself a wage for several months.
It was then that he fully realised what a bad debt expense cost him.
Now he follows my simple 5-Step ‘GET PAID!’ process, he only works for clients that can and will pay invoices on time.
Bad debts contribute to 44% of businesses that fail each year. Those are the companies that run out of cash due to unpaid invoices (bad debts).
What do you do to ensure your invoices are paid on time, so don’t turn into BAD DEBTS?
If you need simple, proven GET PAID! strategy, download my FREE 5-Step Cheat Sheet on the right of this post[/fusion_text][fusion_text]To your business success!