One of the most challenging tasks new small business owners face is managing their cash flow. Constantly reminding customers for payment is not only disheartening but it also wastes valuable time you could spend doing other (more productive) things. If you’re sick of constantly requesting payment, the following are 6 tips you can use to help improve your small business’s cash flow.
Use a Software Tool to Track Available Cash
Using even as basic software tool can help you determine how much cash you have available at any one given time. There are some great online management tools that provide such programs for free or minimal cost to the business. Some of these include Float, Pulse, and Cushion.
Provide Customers with More Payment Options
Rather than restricting customers to one or two payment options provide more options. Making it more convenient for the customer to pay up makes it harder for them to come up with excuses not to do it. Whether you accept multiple credit cards or decide to expand your online payment options, providing more options makes life easier for them to pay up (ideally on time).
Match Your Receivables with Payables
Physically matching the money you make with the bills that will be paid with it helps you see how many customers you need and how much business you must do to break even. Then you have an idea of how many more customers you need to meat savings and profit goals as well. The matchmaking may take time but it can also show you where your cash flow goes in terms of expenditures.
Consider Factoring Your Unpaid Invoices
Hiring a factoring company to take care of billing and collecting money from customers can free you up to do other tasks. When you file invoices the factoring company will pay 70-90% of the money the invoice was for so you have the capital to immediately pay your receivables and be sure that you are not short on cash flow anymore.
Use the Telephone
Calling customers who are consistently late with their payments and voicing your displeasure in a professional manner can help get them to pay on time. Email can be distancing, yet calling them personally is a good bet to get their attention. Once they are aware you expect PROMPT payment they have no excuse not to provide it.
Remember That You’re Not a Bank
Part of the problem with customers who don’t pay on time may be in part thanks to YOU! Yes you! If you are extending customers too much time and leeway to pay for goods or service “when its convenient for them” they might be using you. They think you don’t care when you get paid long as you get paid you will be OK. Stop treating yourself like an ATM machine. You are a business! Demand that customers pay promptly for rendered services as such!
These are a few tips to help new business owners get their cash flow up. Sometimes it’s hard, but demanding the respect a customer owes you will make it clear that you are not their ATM machine or doormat. You are a business here to profit and make money and must be paid as such.
For more information on how to get your customers to pay up on time and how to improve your cash flow, please feel free to reach out and contact us at Flex Capital for more assistance.