Keep your cash flowing in the right direction
Is your business making a profit, yet you never seem to have enough cash in the bank? It's possible to have a healthy, profitable business but still have an unhealthy cash flow. This could be down to a number of reasons - often it's because you're paying your suppliers on time but your customers aren't paying you quite as promptly.
Here are a few pointers you can follow to keep the payments coming in on time:
Make sure you state your payment terms and due date on all invoices and statements. This leaves your customer in no doubt as to when they should be paying. Also include your bank details so they know where to send their payment.
Once you’ve sent out your invoice, give your customer a call a few days later to make sure they’ve received it and have no queries. Very often people put queried invoices into their "to do" pile and then forget about them. If you get this confirmed now, there's one less reason for payment to be delayed.
Send out monthly statements to all your customers, with a clear request that they contact you immediately if they are missing any invoices or have any in query. This is particularly beneficial if you send out several invoices a month, as it's much simpler for them to tell you the statement matches their records than it is to reel off every invoice number they have on their account when you ring up to confirm payment.
Rather than waiting until payment is late, it’s perfectly acceptable to make a phone call to your customer a few days before payment becomes due, to check you’re on their next payment run. You’ll then know exactly when to expect the payment, and also you’re pre-warned if any short delays are expected, for example if a member of staff is on holiday so payment is going to be made a week later than usual.
If you build these steps into your credit control procedure, you'll no longer be leaving payment dates to chance, which makes managing your cash flow so much easier.