Improve your cashflow by getting cash into your business faster!
You have heard us say it before, but cashflow is the lifeline of all business. Without it, you can’t pay your employees, can’t buy new stock, you can’t pay your lease, let alone pay yourselves for the many hours you are pouring into your business. The business cycle will come to a grinding halt. We are acutely aware that many small businesses are doing it tough right now and our advice to you is, try and speed up the time it takes to receive cash into your business (also known as your debtor days). The quicker you can receive money into your business, the better off you will be.
Below we give you our 5 easy-to-implement top tips on how to get cash into your business faster:
Invoice your clients or customers as soon as you have completed the job. The earlier you invoice them, the earlier they are likely to pay you. Simple right? But stop and have a think – are you doing this?
Reduce your payment terms. Gone are the days of paying on the 20th of the following month. Especially for smaller businesses. Can you negotiate receiving money in any faster? Paying within 7 days of the invoice date is now common practice.
Accept payments in advance. What can you negotiate in the form of a deposit?
Be quick to respond when people haven’t paid you by the date you both agreed on. Nowadays, there is fantastic technology that can help you with this. Setting up the ‘invoice reminders’ function in Xero is a great first step. Sometimes people simply need a gentle reminder that they have forgotten to pay you.
Accept multiple payment methods. Implementing Stripe, Paypal, credit cards and/or direct debits could be the difference to allow you to be paid on time. What more can you do to make payment easier for your clients?
Ultimately, by reducing your debtor days (the average number of days it takes to receive payment), you will be reducing the strain on your business, it will allow you to pay your creditors on time, and it will free up important cashflow to enable to you grow your business.
We hope you find these tips both practical and useful. Small tweaks can make a big difference.