If every customer paid their bills on time, cashflow would never be a problem for a business. The reality is, however, that they often don’t pay on time, and it’s becoming an increasingly big problem for more and more businesses as customers struggle to make ends meet.
If you’re a business owner needing to improve your cashflow by getting your customers to pay on time, the following 5 tactics could help you do exactly that:
- Ensure that you’re taking advantage of the latest technology
New technologies and integrations can help make a variety of business functions run more smoothly, including organizing your finances and making payments easier. From Enterprise Resource Planning (ERP) to Netsuite systems, taking advantage of the latest technologies can help you speed up payment processing times and track invoices, to help improve your company’s cashflow. With integrated payment processing, you can also accept online payments and help make it easier for your customers to pay you easily, and on time.
- Collect advance payments
By taking down payments for products or services, or asking for a certain percentage of the invoice upfront before work begins or an item is shipped, can help you gain immediate access to some of your funds, and help you establish which customers are reliable when it comes to paying you.
The only issue you may encounter with advance payments, is that customers become less interested in doing business with you if the amount you’re asking for in advance is too high, or you’re asking for it too early. You should also be sure to give your clients what they have paid for if they do make a timely payment, and take care not to abuse their trust.
- Accept different forms of payment
Nowadays, having to pay only in cash or on a certain credit card is an outdated concept, and today’s customers want to be able to pay for items or services in a variety of ways that are most convenient for them. From credit cards, wire transfers, checks and electronic payments, the more ways your customers can pay for something they want to buy from you, the better it will always be for them and your business.
- Stay on top of your accounts receivables
Sending invoices out as quickly as possible is one of the most effective ways of achieving a better cashflow, and some customers will pay as soon as they receive it. Of course not everyone will, but by capitalizing on those that do, and ensuring that your accounts receivables are up-to-date at all times, you can help stay on top of payments due, and maximise cashflow. If this might be too much of a struggle for you as a small business owner, you could always consider outsourcing this to a third party accounting provider.
- Establish and maintain clear processes and formats
The way in which you format your invoices should always be clear and consistent, and if you’re using an ERP system, it should be automated, too. With consistent processes and timeframes of how invoices are laid out, sent out and collected, not only will it be better for you, but your clients will appreciate it, too.
Even if your business is selling products and services like hotcakes, if customers aren’t paying on time or invoices aren’t being sent out in a timely manner, your business will suffer. To help your business keep a healthy cashflow, you might want to consider working with an outsourced accounting provider, who can help eliminate the burden of accounting and bookkeeping, by tracking your cashflow and enabling you to make more informed decisions about the future of your business.