Maintaining positive cash flow can be challenging for small businesses, whether you’re just starting out or have been running your company for years.
The difficulty often comes down to waiting for clients to pay their invoices. One or two chronic late payers cost valuable time and money when you have to chase them down; if reliable clients also fall behind one month, the result can be devastating.
These tips will help you get paid faster, so you can avoid a dangerous cash flow crunch.
Stagger your schedule
By billing your clients at agreed milestones and at the completion of the project, rather than just at month end, you can facilitate a steady stream of ongoing cashflow.
Invoice quickly – and accurately
When a contract wraps up or it’s your scheduled billing day, send your invoices straight away. Automating your invoicing with a cloud-based accounting solution will eliminate the need for time-intensive manual billing and ensure you never fall behind. Before you send an invoice, be sure it’s addressed to the right contact. It also helps to itemize costs in detail so no questions arise that delay payment processing.
Set a deadline
Make it clear on every invoice when payment is due – for instance, “Payment due on receipt” or “Payment due within 30 days”. Ideally, you’ll have outlined your payment terms in writing, including any penalties for late or non-payment, when you start working with a client. Summarize your terms on each invoice as a reminder.
Make it Easier to Get Paid
Accept payments in as many methods as beneficially available to you. Accept payments by: Credit cards, EFT, cash, cheque. Do not limit yourself to one payment channel, accept as many as you can to ensure it is easy for customers to pay you.
Follow up
If a client doesn’t acknowledge receipt of your invoice, check in to make sure it was received. Inquire about the status of your cheque as soon as a deadline is missed, then resend the invoice with a friendly reminder.
Be willing to negotiate
Sometimes a client intends to pay but needs a bit of time to come up with the cash. Be open to negotiating a payment plan; it’s better to receive payments in small increments than not at all.
Final tips
Although no small business owner wants to resort to legal action, if you’ve tried repeatedly to contact a customer you may have no other option except to claim the loss as a business deduction.
One of the best ways to encourage customers to pay on time is to maintain a friendly relationship. Encourage goodwill by adding a handwritten note to your invoices, remember your customers’ birthdays, and be sure to thank them from time to time for their ongoing business.
For expert advice on managing your cash flow and optimizing your financial strategies, consider reaching out to a business consultant in Adelaide. They can provide valuable small business accounting services and business startup advice. Additionally, to streamline your financial operations, you might want to explore the benefits of outsourced accounting and bookkeeping services. Partnering with the best outsourced accounting services can free up your time and resources, allowing you to focus on growing your business. If you’re looking for reliable accounting and bookkeeping services, outsourcing could be the solution you’ve been seeking.
Chat with the friendly team at TBM Accountants to find the best business solutions that suit your needs. We have extensive knowledge and experience in helping small-medium sized businesses across Australia, and we can provide you with tailored advice that takes into account your unique circumstances. We understand the struggles of business owners and provide practical solutions to help them reach their goals. Our team of qualified professionals are here to support you every step of the way, so don’t hesitate to talk to us!
