Does your cash seem to be lacking even though your business is doing well? Here are 5 tips to immediately improve your cash flow:
Accept Electronic Payments
You’d be surprised by the number of businesses that rely on having their customers send them checks. It’s such a slow process that can take weeks or months to get paid. An easy to implement solution is to accept credit cards and banking transfers so cash becomes available much sooner.
Invoice Quicker
If you have to invoice your customers or clients each month and take weeks or longer after the month is over to send an invoice, then there can easily be months between the date the service was rendered and the date you receive payment. Meanwhile, you have already paid out wages and associated expenses.
Set Up Automatic Payments
For businesses with recurring monthly payments, change your procedures so their monthly payments are made automatically from their checking account or credit card account.
Ask for a Deposit or Retainer
Service businesses and even product-based businesses can ask for a deposit before work is started and when an order is placed. This not only reduces the risk of not getting paid but allows you to get paid upfront before incurring expenses and spending time on a project.
Follow-Up
Sometimes it is inevitable that a customer or client takes longer to pay than they should and the reasons are many. Consistent follow-up regarding outstanding balances can go a long way, however, by implementing the strategies above, your outstanding receivables should be kept to an acceptable level.
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