In the past, I’ve written about business systems as a way to maximize profits.  Systems provide another advantage that is near and dear to my heart-  limiting liability risks.  In fact, systems are an essential way to limit liability risks and protect the assets of a business’ owners.

Here’s an example taken right from the pages of my law firm’s operations manual-

My law firm is a “debt collector” under federal law, because we collect debts for our clients.  That means I have to comply with a set of rules found in the Fair Debt Collection Practices Act.  One of those rules requires my office to deliver the “Mini-Miranda” Warning each time we communicate with a consumer debtor.  The “Mini-Miranda” Warning reads:

We are debt collectors.  This is an attempt to collect a debt.  Any information we obtain during this communication may be used to collect that debt.

But how do we ensure that a staff and office of 18 people reads that warning each and every time we communicate with a debtor?

Systems!  That’s how.

Here’s what is in my office’s Operations Manual and systems to comply with the Fair Debt Collection Practices Act-

• We have a written policy that all employees must read and agree to follow.
• Our initial staff orientation includes training on the Fair Debt Collection Practices Act.
• We hold regular staff training on the Fair Debt Collection Practices Act and any changes in the law.
• We solicit from our staff ideas and new ways to improve our systems.
• A brightly colored copy of the “Mini-Miranda” Warning is posted on, literally taped to, every staff member’s telephone.
• A stack of brightly colored copies of the “Mini-Miranda” Warning are at the receptionist’s desk and handed to any debtor who comes to my office.
• The “Mini-Miranda” Warning is printed on every collections documents we send from our office.
• We police our staff and follow up with any questions or issues.
• And more.

There are more components to our system, but that’s not the point.  The point is that we have systematized the way in which we handle this compliance issue.  Our system creates predictable results, which is the greatest advantage of systems.  We know that we are complying with the Fair Debt Collection Practices Act, because of our system.  We’ve taken all the “guess work” and risk out of the equation.  And, when the law changes, we can easily change the system to match the new law.

Every business needs similar systems to conduct its affairs.  There are no exceptions.  Every business needs systems.  Systems make it easier to become and stay profitable, while reducing risks.  But, you need to make sure the system is being implemented.  You have to “police” your staff to ensure the system is working.

What systems do you have in place? 

What systems need improvement?

Do you have systems that are not fully integrated into your business operations?

What are you doing to improve your business with systems as a key tool?

If you run a business, you need a vacation.  In fact, you need to take a vacation regularly.  And NOT just a vacation to “recharge your batteries.”  I’m talking about a great vacation that makes both your personal life and your business life better.

Here’s what I did on my recent vacation and how my experience can help you as a business person.

Rule #1-   Do NOT try to “get away from it all.” 

DO take your cell phone.  Do check your email.  Do call into the office.

It’s hard to relax on vacation when you’re stressed out about your office, missed calls, office emergencies, clients or customers looking for you, etc.  The notion that we have to separate our business life from our personal life with a “Chinese Wall” is completely ridiculous and completely unrealistic.  If you feel better while on vacation by checking in with your secretary, assistant or manager a few times, then do so.  Don’t WORK, but do check in a few times.  You’ll have a better, more relaxed and fun vacation, if you know that you’ll return home and not have to face a catastrophe.

Rule #2-   Eat well.  Exercise.

Vacations are  a time to replenish, refocus, re-establish and renew.   That applies to our minds, bodies and souls.  Our hectic lives at home wear us down and wear us out.  We fall into bad eating habits and exercise routines.  You can stop those bad habits and establish new ones during vacations.  In fact, establishing good habits is really the best thing you can do on vacation.

I just returned from sailing through the Caribbean, and time in Panama and Costa Rica.  I always wanted to sail through the Panama Canal.  Now I have!  It was fun, adventurous and relaxing.  And, I ate well.  There are no fast food or drive-thru restaurants in the mountains of Costa Rica or along the Panama Canal.  I ate locally cooked rice, beans, chicken, plantains, etc.  Normally, I try to cut out caffeine during vacations, but I wasn’t going to pass up fresh coffee served at the haciendas in Costa Rica.  I did refrain from processed foods almost entirely, and I exercised.  Now my job is to get past the difficult first week back and stay on track to eat well and keep exercising.

Rule #3-    Read.  Something fun.  Something educational.

I read often at home and every day at the office, but there is always a growing stack of books and magazines by my bedside table.  Vacations allow me to read important business books and books of leisure.  I also read those magazines that have stacked up.  I read the magazines first, usually in the airport and in the plane.  I cut out the articles I want keep or read again.  Then, to lighten my suitcase, I throw away the other parts of the magazines.  I save the books for the beach!

Rule #4-   Come Home With Ideas.

Take some paper and a pen.  This is a time to reenergize and become motivated to be a better person and businessman (businesswoman).  You should outline ideas, hopes, concepts, aspirations, etc. that you’d like to accomplish when you return home.  Do NOT rewrite your business plan.  DO think about larger, exciting and interesting ways to come back from vacation and become better than ever.  Consider a few new ideas that you could implement when you’re back at it next week.  If you took the right books and magazines, you’ll have new ideas that excite you about the future of your company, firm or career.

And this Rule #4 applies to your roles as a father, husband, wife, daughter, girlfriend, friend, partner, etc.  This is not just about business.  I came home with ideas about being a better friend, father, son, brother, etc.

My financee and I spent hours on vacation talking about her law immigration law practice, our pending nuptials, and our future together.  We took a very fun “marriage workbook” with us, and had a blast going through it.  We talked about a wide range of topics, both personal and professional, and we came back ready to take on the World together.

Rule #5-    Make It Memorable

Have a great time.  Try doing something you’ve always wanted to try.  Maybe try white water rafting.  Or deep sea fishing.  Or, sailing through the Panama Canal.  Whatever it is, give yourself reason to remember how good it felt to reward yourself with time away from your routine and sources of stress.  Take a few vacation photos and tape them to your PC or desktop.  If you can remember your positive vacation experiences, you’ll remember that the routine stuff is worth it.  And, you’ll be more likely to take another vacation sooner than later.

Rule #6-   Follow Up When You Get Home

Now that you’re back, make the most of your vacation.  Schedule time on your calendar, or in your PDA or planner to follow up with things planned on your vacation.  Do these things:

• Do eat better.
• Do get better sleep.
• Do exercise.
• Do implement those business concepts, plans and goals.
• Review your notes and the magazine sections you kept.
• Do make changes in your personal life to feel more successful as a father, daughter, wife, etc. . .  and businessperson.

Here’s a final idea. . .  print a copy of this blog today, and put that copy in your favorite suitcase.  Tomorrow, schedule your next vacation.  Then, when it’s time to pack the suitcase, pull out and read this blog again.  Pack your magazines and books.  Get on the plane and start at the top with Rule #1.

Do these things, and your business will benefit tremendously.

Times are tough.  Now more than ever, you need to make sure that you get paid for every product and service you provide.  Make no mistake about it- your clients and customers are watching THEIR cash flow closer today than in many years past.  So, you need to make sure that your customers’ cash flow difficulties don’t become your accounts receivable problems.

Every business has experienced some difficulty in getting paid at one point or another, and many business plans are formed with the presumption that a certain percentage of the business’ accounts receivable will go uncollected. The problem of collecting accounts receivable is not usually the cause of a business’ failure, as more businesses fail from undercapitalization.  However, collections problems can prevent a business from growing and will always negatively affect the business’ profitability.

So, how do you avoid the risks that an account receivable will become uncollectible? As is usually the case, preventing the problem from occurring is far less costly than curing the problem once a client or customer fails or refuses to pay you for your goods and services.  Try following these basic collections rules.

Get It In Writing.

Have signed contracts and forms.  Any change in terms should also be in writing and signed.

Get Paid In Advance.

You should require substantial deposits and down payments before you begin ordering parts or using materials. And you should require payment-in-full before you begin performing services or relinquish control of your property.

If You Don’t Get Paid In Advance, Get Security.

This rule does not apply to leasing agreements or the simple cash transaction such as the sale of a dozen doughnuts. In larger transactions, particular those involving the sale of moveable personal property and real estate, the seller should demand a security interest in something of value. A mortgage, a recorded land contract, a mechanic’s lien and a lien on personal property are familiar examples of security interests.

If The Customer is Credit Risky, Demand A Guarantee.

If you fear that a customer is a credit risk, ask for the signature of a guarantor who promises to pay the customer’s debt to you in the event the customer does not. Remember, however, that the guarantee is only as good as the guarantor is creditworthy.  An owner of a business is the natural person to guarantee the debt of his or her own company.

If Your Contract Does Not Allow For Collection Costs,

You Cannot Get Them.

The “American Rule” is that litigants pay their own attorneys’ fees. So, if you must retain an attorney to collect a debt, you will pay the attorneys’ fees and most other collections costs. The exceptions to the American Rule are the existence of a written contract allowing the recovery of attorneys’ fees, a statute allowing such recovery; or the assertion of a frivolous, unreasonable or groundless claim or defense. The easy solution to the American Rule is to include a provision in your contracts allowing YOU to recover your attorneys’ fees, collections and court costs. Your customers should not have the same right to recover against you.

The Check Is Never Truly In The Mail.

The lesson here is to begin legal proceedings as soon as possible and not to delay in collecting your money or retrieving your property.

Call Your Lawyer Early.

As a final suggestion, consult your attorneys as soon as you suspect difficulty in collecting a debt. Often a stern letter from an attorney on a law firm’s letterhead can have a dramatic effect on a delinquent customer. You also should consider consulting your attorneys to review your entire billing and collections processes. A good lawyer does his/her best work before problems arise.  I have assisted businesses whose agreements, leases and other forms were outdated or lacking important provisions which would allow the business to pursue additional remedies against a delinquent customer.  That’s when I’m most effective- in preventing problems rather than solving them.

For a more detailed version of this article/blog, go to my law firm’s website:  http://www.indiana-attorneys.com/articles_news/index.htm