Top 5 ways to get more $$$$$ in your Business

Cashflow is the number one problem for small business. While short term issues can be resolved the longer term may not be sustainable for your business. Don’t let your business become a statistic!

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  1. Invoice

Invoice immediately – If you are invoicing weekly or even monthly (gasp!) you are giving your customers extended credit terms which will greatly affect your business cashflow. With easy invoicing through many mobile devices there should be no more excuses! You can invoice, email and accept payment before you have even left the premises

Email your invoices directly to the person responsible for making payments. Many accounting software systems allow you to review whether an email has been opened by the customer, if you don’t have this feature ensure you ask for a ‘delivery or read’ receipt through your email program

Discounts for early payments can be a great incentive for your customers but could hurt your bottom line if not factored into your overall pricing. You may want to charge an administration  fee for late payment to account for additional work chasing payments

With the introduction of live bank feeds and dashboard summaries in many accounting packages there are no longer any excuses for your accounting data not to be up to date. You can clearly see at a glance invoices currently outstanding  on the dashboard summary with further detailed reports available

 

  1. Trading Terms

Are your customers required to apply for a trade account? There are many free template application forms available on the web which would need very little modification. The application as well as contracts or engagement letters depending on your industry enables you to clearly state your trading terms as well as any additional fees charged for late payment. Credit checks and following up business/trade references is essential to reduce risk of non-payment

As well as your trading terms, include the actual due date of payment on all invoices to avoid any confusion and unnecessary payment delays.  Limits may be setup in your accounting software to warn of current outstanding invoices for a specific customer when processing a new sale so staff don’t accidently extend further credit to slow or non-payers.

Again your accounting software should make it easy to review overall average number of accounts receivable collection days through dashboard summaries or reports. Some softwares will also show average number of collections days for a specific customer allowing you to decide on an individual basis who you wish to continue trading with. Reducing collection days by even a minimum amount can greatly enhance the cashflow of the business.

 

  1. Prepayments

Depending on your industry you may be in a position to request a deposit upon commencement of work or an order. Instalment or work in progress payments may also be required at specific points prior to completion. Any deposits or progress payments amounts should be clearly stated in your initial contract together with expected payment dates or progress made.

Up front pricing works particularly well in the accounting industry resulting in better planning and cashflow advantages for clients. On ascertaining a clients annual requirements I am able to ‘bundle’ there services including telephone calls and email to encourage frequent communication. Regular monthly payments reduce the annual fees to assist cashflow.

I recently heard of a coffee shop which sold a prepaid card which could be easily swiped therefore reducing the wait time in the mornings for customers. This implementation meant that for each customer with a card the shop was receiving the next ten days worth of coffee payments upfront which greatly enhanced their cashflow. This is what I call a win/win for both the customers who want to be on their way and the coffee shop.

 

  1. Outsource Debtors

Outsourcing your debtors enables you to get paid straight away on your invoices greatly enhancing business cashflow. There are several outsourcing options available including the following

Factoring                                                             Discounting

Selling Debtors/Specific Invoices               Borrowing/Credit – Receivables Balance

Ownership Transferred                                 Sales Ledger collateral for borrowing

Disclosure                                                          Confidential

Collection by third party                                 Credit control remains with Business owner

With/Without recourse

 

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  1. Debt Collection

Not many business owners like debt collection and may be concerned customers will get ‘angry’ or take their business elsewhere. Ensure you have a procedure or systems in place to handle slow payers including

–        Send Statements

–        Document all correspondence and phone calls

–        Have an employee follow up debts so you can maintain the relationship

–        Consider accepting payment plans

–        Outsource to a collection agency

 

  1. Bonus Tip – Payment Options

Make it easy for customers to pay you! What are acceptable payment options in your business, do you accept cheques (yep, some people still have them), credit cards, paypal or a direct transfer into your business bank account. With merchant fees sometimes being hefty some of these choices are more expensive than others.

If you have a shopping cart website have you tried the process yourself to ensure it is simple and easy to use with no bugs

Some accounting software programs now give you the option of having a pay now link on your invoice so customers can pay on the go. If they can simply click a button, select their preferred payment option and complete the payment without having to log onto a banking website then you may get paid sooner.

Make it as easy as possible for your customers to pay you so they will have no excuses

 

Even if you only improve some of these areas in your business you will should ensure a more consistent, steady income stream in your business to enable you to succeed. Good luck!

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