In the good old days,’ the onus on prompt payment was on the client. That made it much easier for business owners to handle their business cash flow.
Now, together with everything else you must do, the onus on managing your cash flow is firmly on you, the business owner, so we’ve put together our 7 best tips to assist you.
1. It Pays To Do Your Homework
For bigger customers you might require a signed contract and a purchase order. Learn what you need and their payment terms ahead of time. For example they might have money left in a budget and need invoicing straight away. For smaller customers be sure that you agree the price in advance so there’s absolutely no query on your bill. Get the mobile number of your contact in the business and if possible find out the name of a person at the credit control department in the event of a query.
2. Don’t delay
Invoice immediately on finishing the job, or if appropriate require a 50% deposit up front with the remainder payable on completion.
3. Payment terms
Ask for what you need. Don’t feel you must put’Payable within 30 days’ Either place’Pay on reception’ or a due date within 14 days. If you do not ask, you won’t get.
4. Assess Your Bank Account Regularly
It’s well worth taking the time to discover immediately if payment has come through, and if you use cloud accounting software, your bank balance will update frequently so that you will know straight away.
5. Don’t Be Shy
If you don’t get the money when you anticipate it, then ring up your contact at the business and discover why. Why not email? Emails are too easily dismissed. Your contact may be able to chase up payment for you, or provide you the amount of the person you will need to speak to.
6. Don’t Take ‘No’ For An Answer
If you do not get a response, keep trying. Not just daily, but a few times a day if you want to. Imagine how it would be if the tables were turned and they were owed the money? Surely they would chase this up.
7. Cash Flow In Different Parts of Your Business
Both main areas where you can control cash flow are inventory and providers. Keep a close eye on your inventory, as perishable inventory or slow-moving inventory can suck money unnecessarily from your business.
Check your providers’ credit conditions, and use them. Keep in mind however that your long-term relationship with your suppliers is like a golden nugget in your business, and they’ll honor you and respond to your needs if you pay on time.