8 ways to improve business cashflow
Are you always chasing late payments? Then don’t despair, there are plenty of things you can do to get your clients to pay on time. Here’s are 8 things you can try to improve your cashflow.
1. Always take a deposit
If you’re selling a product or service that takes time to fulfil, always take a deposit. The amount will depend on what you’re selling, but the higher the better. This will help you get paid earlier and offset the risk.
2. Invoice when you complete the job
It may sound obvious, but don’t wait till the end of the month to send your invoices. Send them when you complete the project or deliver the product. That way it is top of mind for your client.
3. Know your client’s payment cycle
Find out if your client has set payment cycles. Do they process payments every week or do they process invoices on the 30th of every month? Ask your client and then fit in with their payment cycle.
4. Set clear payment terms
Many businesses neglect to include payment terms in quotes and then subsequently on invoices, expecting they will get paid straight away. Instead, communicate your payment terms upfront and on your invoice, this will set clear expectations.
5. Offer different payment options
For larger amounts, most customers will pay via bank transfer. But it’s always a good idea to give your client plenty of options. Credit card, PayPal and the old-fashioned cheques all work too.
6. Provide a pay on time discount
Power companies use this tactic regularly with success, offering significant discounts to pay your account time. You don’t have to discount to the same level, but a 5 or 10% discount might be enough to entice a slow-paying client.
7. Follow-up your invoices
How many times have you sent your invoice only to find out that it never got to them or the right person? A regular and friendly follow-up should always ensure you’re near the top of the payment list.
8. Keep it friendly
There’s a fine line between being too friendly and not friendly (read: aggressive). If you’re too lenient your payments tend to get pushed out, but if you’re too aggressive you might kiss the customer goodbye!
So, what are you waiting for, implement all or some of these tactics and you will surely unlock some much-needed cashflow.
To discuss other ways to improve your business and its cashflow call PPT on 5331 3711 (Ballarat) or 8391 3063 (Melbourne), or send us an email.
DISCLAIMER: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
