Getting paid on time
Getting paid on time and keeping business cash flowing is the most important thing to keep your business wheels rolling. It’s the life-blood of any business and you need it to survive, sustain, and grow. You need cash for a whole variety of things, from paying staff, bills, and buying stuff you need like materials for example. Also for paying your taxes!
Three things to remember to help keep that business cash flow moving in the right direction.
Some important points to help keep your business cash flow flowing.
Get your policies right
Firstly, make sure your Credit Control policy is clear and concise.
Include what your credit terms are i.e. 7 days.
Look at how you will deal with late payments and if you would be prepared to offer a Payment Plan.
Your terms and conditions must be clear and unambiguous. Tell customers and clients as soon as you start business with them what your terms are. If you don’t this could cause problems for you and your business if things go wrong.
Keep track of your cash flow
You always need to know who owes you money- it’s a vital part of your business whatever size.
Keep track of who has gone over your credit terms and contact them as soon as the deadline date passes.
Don’t leave it as this sends the wrong message. Similarly keep track of what cash you have going out. and put together a cash flow list. This will show you
- Cash coming IN and going OUT of your business
- Extra cash coming in and any shortfalls
Cloud accounting packages really help make this easier to keep on top and on track of. We like Xero:
It records and:
- Keep track of money owed and when payments is due
- Lets’ you see a customers’ records at the press of a button, i.e. things like outstanding invoices and how long they have been outstanding
- Shows you important business information- such as your current cash situation, if you’re making or losing it etc
Keeps track of all invoices and transactions
Consistency is the key to keeping your business cash flowing. It will help you to manage how and what credit you give.
- Deal with late payments as a matter of urgency payments. Don’t leave this to chance i.e. make sure late payments are led by you and not your customers or clients.
- Invoice reminders- send these out promptly. Don’t delay this as it sends out the wrong message.
- Decide how you will chase them up e.g. an email, letter or a phone call.
- Make sure reminders are sent out when they suit you best
- Add notes to a customer account e.g. If they’ve asked for a payment plan and how much they’ve agreed to pay
Finally remember if you stick to these points your cash should keep flowing in- it maybe a bit difficult at first but like with anything perseverance and consistency is key