Would your business run more smoothly with better cash flow? Mine certainly would.
Small businesses owners focus a great deal of attention on new business sales and administrative/operating expenses, as they should. However, all the sales and operating efficiency in the world are not worth much if your accounts receivables are stagnant – if customers are not paying you or are paying you too slowly.
Here are some simple things you can do to increase your cash flow in 2018:
Revise or strengthen your credit terms and policies. Not all customers deserve the same credit terms or limits. Customers who have a strong payment history should be rewarded with your best terms. Use their excellent payment history to sell more product or service to them.
Bill promptly and accurately. The sooner your customers receive your bill, the sooner they can pay you. Revise your payment terms to “payable upon receipt” rather than in thirty days. Go “paperless” and email invoices to customers so that they receive your bill sooner. Invest some time into making sure invoices are accurate. A little quality control will cut down on disputes, and get payments to you sooner.
Require deposits and down payments. Every credit customer should give you a deposit or down payment. Customers with skin in the game are more likely to take a payment plan or credit line more seriously.
Make it easy for customers to pay you. Can your customers pay you online? Do you accept many forms of payment including some of the newer methods such as PayPal?
Strengthen in-house collection procedures. Stay on top of the aging of your receivables and have a plan to act on them at 30, 60 and 90 days. Use collection letters and personal calls to customers to bring the money in.
Best wishes for a healthy and prosperous 2018!