3 Simple Ways To Boost Your Cash Flow
If you haven’t heard the news, cash flow is a bit of a big deal.
In fact, it is often credited with some rather unsavoury headlines. For example, many sources believe that it is the number one killer of a company.
To put things into a perspective, the scary thing about cash flow is that it affects so-called healthy companies. A business might have umpteen customers and be seemingly making great profits on paper. The big problem? They’re not getting paid on time for their work. Bearing this in mind, today’s guide will take a look at three areas you can keep on top of in a bid to safeguard your cash flow and ultimately, your business.
Know Who You Are Dealing With
One of the main reasons why so many companies fall victim to cash flow is because they don’t know who they are dealing with. Contrary to popular belief, the so-called ‘good’ companies who we all know and use aren’t always the best to deal with. If you look in their small print, they often have long payment terms – with some not settling invoices until for up to 90 days. For a small business, these delays can be catastrophic.
As well as analysing the fine print of any contracts, make sure that you perform credit checks. If you know there is a risk of a customer either defaulting or taking an age to pay, you may need to restructure your agreement with them.
Send out Invoices Immediately… And chase
Next, it’s all about efficiency on your behalf. As soon as you deliver a product or project, send an invoice out. A common example is to be blighted with an avalanche of paperwork, meaning invoices aren’t delivered until months or weeks later. If there is then a delay in paying them, the repercussions speak for themselves.
Then, make sure you chase. If you’ve not heard back about payment in a reasonable time-frame, follow it up. Or, if things are starting to get beyond a more serious stage, consider a debt collection agency to do the legwork on your behalf. This method will at least preserve your cash flow, even if it will cost.
Negotiate With Suppliers
Up until now, we have spoken about the need to handle your customers and clients better.
The final piece of the jigsaw is about your suppliers. They also fall into the cash flow equation.
While this tip won’t work with every supplier, if you can remain on friendly terms with those that you use it will help your cash flow plight no-end.
For example, some might be willing to enter into an agreement where you pay them less, if you pay upfront. Or, you might even be able to negotiate longer payment terms, which can be crucial if you are attempting to perfect your cash flow efforts.
There’s no right answer here; you’ll know what sort of cash flow position you are in, and what is needed from your suppliers as a result.