When you are running a small business or any business, cash flow is super important. Some businesses lose sight of this and struggle financially because of it. So what can you do habitually to ensure that your cash flow is always flowing so to speak?
Tip # 1: Timely invoicing
This one seems obvious but surprisingly some businesses do not invoice in a timely fashion. Try and invoice your customers as soon as you ship the product to them or render services to them. For example, have a formal internal invoicing policy that states your requirements for invoicing a customer. For example, customers have to be invoiced within 48 hours after any deliverables.
Tip # 2: Be flexible
Giving your customers different payment options is also a great way to collect money faster. You will lose some percentage with credit/debit transactions but you will collect money much faster. Another option is to offer discounted net terms. For example, 5% off net 15. This might encourage your customer to pay faster because they want to save as well.
Tip # 3: Stay on top of receivables
Take a look at your accounts receivable reports on a weekly basis or create alerts for invoicing coming due. Stay on top of things by reaching out to your customers when invoices are past due. This could be automatic reminders created in your accounting software or someone printing the accounts receivables report and calling customers that are past due.
Bottomline, stay on top of your accounts receivables and cash flow will be less of a problem. Having a department or someone dedicated to this role is also very important.