Your cashflow is the lifeblood of your business. At the same time cash flow is, most likely, the most common cause of stress. With this in mind here are 10 easy ways to boost your cashflow – choose at least 3 you can use better than you are currently:
- Agree your terms of trade at the start of EVERY job – when and how you will invoice, when you expect to be paid and what you have the right to do if you’re not paid
- Give payment options – consider a discount for payment up-front, ask for a deposit or offer fee funding (through an out-sourced provider)
- Invoice on time and in line with your terms of trade – don’t procrastinate here by doing more work before you invoice or, better still, get someone else on your team (internal or external to your business) to issue the invoices
- Have 2 columns in your statements; Current and Overdue – delete references to 30, 60, 90 days as this sets up an expectation that it’s ok to pay on those terms
- Make it easy to pay – email your invoices and statements, put your bank account details on your invoices and statements, accept payment by credit card
- Monitor your collections daily – use a cloud-based, real-time system.
- Follow up non-payment – the day after your job is completed to ensure your customer is happy with the job and to remind them of the payment terms and then again the day after the payment was due (if not paid)
- Put ONE person in charge of collecting debtors – not the business owner or person who made the sale or did the work
- Don’t do more work for a customer if they have amounts owing to you
- Use an outsourced debt collector – so long as you have followed the above steps you can recover the debt collector’s costs from your customer and can simply describe this as being part of your normal process – you are not a bank after all
Lastly, remember that a sale is not made until the product or service has been delivered AND the money is in your bank account.
Revenue is vanity, profit is sanity, cash is reality – Anon