Whether you own a small business or a large one, you must ensure smooth cash flow so you can operate without any pressure. Most small businesses struggling to clear bills find themselves in the predicament because they have failed to manage their cash flow in the appropriate fashion. Some common signs of cash flow problems include:
1. Inability to clear bills on time
2. Customers carrying balance from one month to the other and failing to pay you in time
3. Problems with credit though the business is booming
These are a few of the many indicators or poor cash flow management. If you feel this is the case with your business, you can follow some of the following tips to make things a bit easier:
Find ways to encourage timely payment
Getting paid by your customers in time is certainly the best way to ensure proper cash flow. However, threatening your customers into doing so by hounding them or levying high rates of interest may not be the best way moving forward. While keeping high rates of interest for late payment may be fair in every way, this is certainly not the way to build good relationships with customers. Instead, look positively reinforcing options such as discounts for early payments.
Make payment easy
This may sound like an obvious piece of advice but you would be surprised at how many business fail to follow. These businesses make the mistake of sending highly complicated invoices to customers which miss on some vital information such as options for payment. Invoices and templates should clearly state how customers or clients are supposed to clear bills in the easiest possible way. For example, if your business accepts credit cards, make sure you mention the same visibility in the invoice. Again, you should also be aware of the most popular methods of payment being used in the industry relevant to you and offer customers with all these options.
Check for customer credibility
How often you come across no-pay or slow-pay customers depends entirely on the line of business you have chosen. According to Premier Collect debt collection London, clients with a poor credit history may often take to operating under a different name to avoid problems So, it is important to do some research on your clients prior to any deals and do not hesitate to ask for references as well. Many vendors may have posted negative reviews on these websites and these are clear warning signs of poor payment practices.
Go for automated accounting
This may not be the most interesting part of your business but streamlining your accounting methods can certainly help keeping your cash flow smooth. There are several automation options for the same that will make your job much easier. In fact, these tools can take care of several tasks such as accepting credit card payments, mailing out invoices and assigning telephone representatives to get in touch with customers with outstanding payments. These methods help you get past the tedious part of managing your cash flow so you can focus on more important parts of your business.