Whether you’re planning to start a business over the coming months, or want to build your current venture, one of the key elements that you need to keep a close watch on is cash flow. Not being able to pay staff members or other bills is one of the more common reasons why ventures end up folding,; plus not having a good handle on cash flow can also cause you a huge amount of stress.
To make things easier and to ensure your long-term success then, it is vital that your business planning incorporates thoughts on cash flow and how to ensure there’s no holdup. There are numerous ways you can ensure customers pay on time and the cash keeps rolling in. Read on for some strategies you can implement today.
Invoice Quickly and Provide the Right Payment Options for Your Customers
One of the first things to do to get your cash flow in order is to invoice people as soon as work is completed. This ensures they receive your bill when the work is fresh in their mind, which makes it more likely that they will pay straight away. As well, the sooner you send out your invoices, the less likely it is that you’ll forget about doing it, and the sooner you’ll get paid.
It is also important to find the right payment options for your customers. In this day and age, people expect to have numerous choices when it comes to making payment, such as via credit and debit cards, bank deposits, direct debits, over-the-phone payments, PayPal, and more. As such, it is important that you don’t limit customers, and that you also work out what types of options your particular customer base is looking for.
As an example, consider SMECO, the Southern Maryland Electric Cooperative, an electricity company. SMECO used to have multiple employees processing payments that came in via cash, card or check, something that cost the company both time and money. More importantly, though, from a user-satisfaction perspective, customers were disappointed about not being able to pay online. As well, customer service reps had to spend a lot of time answering questions via phone calls, but couldn’t actually take payments that way, which frustrated clients.
Another issue that SMECO found cropping up time and again was that when their reps were working with customers in the field, they had to call up the office and verbally submit payment information to complete a transaction. This was tedious for both workers and customers, and slowed down workflow.
To remedy this, SMECO utilized E-Complish’s payment processing solutions and streamlined payments. An automated phone payment system was introduced, as was an electronic bill payment option for online payments. Mobile payments can now be taken in the field too, plus payments from various sources can be combined on one central VirtualPay location. Since implementing these types of tools, SMECO has grown their customer base while at the same time freeing up team members.
To follow their lead, take the time to analyze what your customers want, and what pain points seem to keep coming up for both your clients and your business. Find ways to make more payment options available, in a way that will satisfy your target market, and you’ll soon see cash flowing in more quickly and easily.
Make Payment Terms Clear and Send out Regular Reminders
It’s also important to make payment terms clear on your invoices so that customers pay you in a timely manner. On your bills, you should state the bill due date in a large, clear font, and put this information in a prominent spot. As well, make your bank account details and other payment information easy to find.
You will also enjoy better cash flow if you send out regular reminders. Oftentimes bills go astray (either in the mail or via cyberspace), so customers won’t actually realize that a payment is due. As well, with the busyness of life, it is easy for people to forget about an invoice. When you send out regular reminders (with the first starting as soon as the bill becomes overdue), you will prompt customers to pay you and make it clear that late payments aren’t tolerated.
If you find that you still aren’t getting paid on time, consider putting incentives in place for quick payments. This might be a small discount on the next bill, or things such as free or faster shipping, or bonus goods or services.
Negotiate With Your Suppliers
Lastly, don’t be afraid to free up cash flow by negotiating with your suppliers. Ask for account terms, if you don’t already have them, or if you do, ask to get an extension. For example, rather than having your bills become due 7 or 15 days after items are shipped out, see if you can extend this time frame to 30, 60, or even 90 days instead.
It also pays to ask for things such as free shipping rates, bonus goods if you buy over a certain amount of stock or purchase from the company a set amount of times per period, and the ability to return goods that don’t sell within a certain timeframe.