How to Improve your Cashflow
January 19, 2011
When times are tough, it tends to be the small businesses that suffer most. The big companies withhold payments, credit becomes harder to come by, and you can be left with nowhere to go.
Closing the sale is only one step in the process of generating revenue. Getting payment can be a challenge in its own right. Here are some suggestions for boosting the rate at which cash is received from customers:
- Deposits – where possible take some money up front. This has the added benefit of creating commitment.
- Prompt payment discounts – offer customers a better price if they are able to pay on delivery, or even better, with the order.
- Statements – remind customers how much is outstanding on a regular basis.
- Credit control – have a firm and consistent process in place. Close every call with a commitment from the customer to some sort of action and record it along with the name of the person spoken to.
- Invoice Finance – even with firm credit control businesses can wait 30, 60 or even 90 days before being paid. Invoice Factoring or Discounting unlocks the cash tied up in sales ledger balances and payment can be received within a day or two of raising the invoice.
At the same time, you should look at your outgoings and see if there’s room for flexibility. Talk to your suppliers and negotiate better deals based on your loyalty and the size of your transactions.
- Always ask for 3 quotes when looking at a purchase. The cheapest may not necessarily be the best but knowledge is power.
- Make sure you’re not paying over the odds for basic necessities and utilities. There are plenty of price-comparison sites online that can help you do this.