While ‘accounts receivable’ is undoubtedly the most enjoyable part of doing our finances, ‘accounts payable’ is a glaring reality that salon owners need to be on top of.
“Every salon owner should have an accounts payable policy in place,” says finance expert Jeremy Fletcher. “It streamlines your processes so that you, and anyone else that is privy to your finances, knows how things are done. It will reduce the time it takes to process invoices and other expenses, and ensures that everyone is clear on what documentation is required before any funds are released.”
You DO need a policy
If you’re one of those businesses that takes an unusually long amount of time to pay invoices, or ‘loses’ them and needs ton have them re-sent, you’re not going to be in any position to ask for favours. “There’s no way a supplier is ever going to give you a better price moving forward when they can never rely on you to pay on time,” says Jeremy. “And you’ve likely got zero chance of them offering you any special terms when the going gets really tough.”
Possibly more importantly, if your payments policy doesn’t extend to you paying your staff on time, you’re likely on borrowed time, says Jeremy. “Pay your staff on time, every time, before you ever pay any other bill. Your salon doesn’t open if your staff walk away.”
Be transparent and fair
Once you’ve drawn up your policy, share it with your team for their feedback, advises Jeremy. “Listen to their feedback and advice. For example, if your beauty therapists are contractors and your policy suggests invoices will only be paid within 90 days, they may refuse to work under those conditions,” he says. “Similarly, be upfront with suppliers as soon as you place an order, so they know what your payment terms are.”
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