1) Can’t Pay Won’t Pay
We all know the story, we invoice customers and wait and wait, and wait! That can make cash flow planning and management difficult.
Here are 3 tips on encourage your customers to pay and your cash flow to stay flowing!
• Issue invoices promptly and follow up on them regularly. Sounds simple but not often done. If they client thinks you don’t care about getting paid then why would they go out of their way to pay you? How about introducing an online tool to make invoice reminders automatic so you don’t have to think about chasing?
• Offer a discount for early payment. If your standard contract has a thirty day term, give a small discount for payment within 7 to 10 days.
• Ask for an upfront deposit or schedule payment intervals. Or even better use an online payment method so that you can collect payment on an agreed date!
2) Take the Credit
You can arrange some kind of credit finance with your bank or credit union. Or talk to us about government backed loans to develop your business. Make sure you understand the repayments and charges and plan for these accordingly.
3) Build a Cash Reserve
Build up some cash reserves to avoid this problem by starting to set aside funds now for the rainy day.
Take a look at your cash flow history. How much would cover your business for three months, six months, and a year? You would be surprised, just knowing those numbers can help you make better business decisions and in turn have a better cash flow.
4) Set budgets, review and reset
Use your recent financial numbers to set realistic budgets for your business for the next 12 months, beyond that if you can. Look at different scenarios in terms of future sales and costs. Set aside time to review what actually happens against what you planned for, and reset your budgets again. Do all this using online tools to link up and synchronise your budgeting and forecasting!
So, now you know how to get cash flowing, put that knowledge to work for you! Have more questions? Email us at firstname.lastname@example.org;