For most businesses, cash flow means balancing working expenses against prompt payment of invoices by customers. Late paid invoices can cause frustrating service delays, uncertainty, and an inability to plan effectively.
Here are 6 tried and tested ways that you can control your payment timeline.
1) Clear Payment Expectations
Having a clear and visible payment schedule with agreed expectations can help both suppliers and clients.
There are two helpful approaches to invoicing procedures:
1. Ensure the invoice is issued as soon as is practicable after work is completed, preferably within 48 hours.
2. Ensure the invoices are correctly produced with order numbers, charges as agreed and clear payment terms indicated.
Starting the invoice process correctly will help to establish a payment rhythm. Clients can then manage their own cash flow and expectations, and are more likely to pay the debt on time.
2) Be Flexible About Payment Methods
Most businesses use electronic payment methods. However, be prepared to attune to your client’s needs. Credit cards might be used to accrue benefits such as air miles and bonus points. PayPal is favoured by many SMEs. A few companies still use cheques. When invoicing, make the choice is clear and ensure that all of the necessary details are available and ask about the payment methods before the invoice falls due to allow all parties the time to adjust accordingly.
3) Ask For A Deposit
Deposits are a reasonable request when discussed at the start of the proposed transaction. They give the client reassurance that their order will be delivered, and also keep the cash moving to enable the project to be completed. When requesting a deposit, ensure that a clear paper-trail is established. There are many scanning apps available, so clients and vendors can easily sign a document and send a facsimile via email.
4) Consider Invoicing Software
If you have a large number of invoices, invoicing software can remove many of the day-to-day headaches. There are many different options available. A standard feature is automatic invoice reminders, which help to free up time whilst reducing the risk of invoices gathering dust. Remember, the more manual your systems the more the likelihood of human error.
5) Try Invoice Financing
6) Check The CRM & ERP Options
Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) software are at the heart of many organisational strategies. These packages streamline organisational data to provide advanced analytics that support you with your key indicators within your business.
Many CRM and ERP bundles will be able to send automatic invoices. They will also be able to identify flaws in the invoice chain, alerting companies to clients who are routinely slow to respond to invoices. In these cases, invoice financing might be a reliable strategy.
At Business Finance Solutions Ltd, we are committed to helping organisations visualise their cash flow and maintain a healthy balance of payments and income. If you would like advice or information, please email email@example.com, or call us on 0345 50 50 888.