Cash flow is of vital importance to the health of a business.The lag between the time you have to pay your suppliers and employees and the time you collect from your customers is the problem, and the solution is cash flow management. In a tough economic climatic, cash flow management can prove to be the difference between growth, stagnation or even collapsing of a business entity. Below are some ways to make cash flow easier to manage.
Debit orders – One of the best ways to get your cash flow in order is to get your customers to use debit orders. Debit orders are cheaper than other payment methods and there is no delay in paying even if the customer is occupied somewhere.
Use discounts and rewards to incentivise your debtors to pay fast – Offering your customers small discounts or rewards for fast payment can help to push your bill to the top of the pile of invoices for the month. Depending on your situation, it may even make sense to encourage them to pay upfront with an EFT payment discount.
Offer your customers more ways to pay – The more payment options you have the easier it is to get your cash flow boosted. Make it easy for your customers to pay, whether its by electronic fund transfer, a credit or debit order or even a cheque.
Use technology to stay in touch – An important element of cash flow management is chasing up payments from people who owe you money and technology definitely does a great job in this regard. It can automate much of the work of billing customers, sending reminders and providing receipts.You can also use email and SMS alerts to follow up customers who have not paid on time.
Make your payment terms clear and fair – Explain your trading terms and conditions upfront to customers,they will appreciate the honesty and transparency. If customers know your terms are cash on delivery or 30 days, they would be better prepared to pay on time.
Be safe and secure – There is nothing worse than having a system meltdown or computer crash. In todays modern age, most data is stored in a digital format. Make sure the transaction processing provider you use keeps accurate records which are backed up regularly and stored in a safe and industry acceptable manner.
Don’t delay, pay – Just the same way you want your customers to pay you faster, the same applies to your suppliers.You might even negotiate a discount for early payment.
Save, save and save – Since most traditional saving platforms, such as ordinary business bank accounts don’t offer any real savings related benefits, it is preferable to source a service provider who will assist you to earn interest coupled with having fast access to your money.
The above tips if applied well will truly serve you well in the area of cash flow management.