Cash Collection! Here's how to improve it.
By Eryan Haddon.
Generating sales is critical to business success, but that is only half the job done. Getting paid quickly for your product or services is just as important and is the key to good cash flow.
“A sale is a gift to customers until the money is in the bank” Nolan Bushnell
As owners of small businesses, we can sometimes feel helpless when it comes to getting your customers to pay their bills on time. But you just need to change your thinking. You are in the driver seat when it comes to your processes, systems and terms. So be proactive and make collections a top priority in your business.
Here are our Top Tips to Improve your Cash Collection:
- Formulate a clear strategy on customer credit, make this your policy and articulate this with your team so that know how they fit in.
- Timely and regular preparation of invoices. It is a proven fact that a customer’s desire to pay is much greater prior to or directly after receiving the goods or services.
- Request upfront payments on smaller job that will be done quickly or for customers with poor credit history.
- Request deposits or progress payments on larger jobs – especially if you are required to cover a lot of labour or materials in the interim. By the way, this absolutely is achievable in any industry.
- Be clear on your payment terms from the outset. Payment due immediately upon completion of the work is the new norm – no 30 days net.
- Embrace technology – offer pay now functions on your invoices. Online products such as Stripe and PayPal allow you to take instant payments and customers are much more inclined to pay immediately upon viewing an invoice if the option is available.
- Embrace technology – investment in accounting systems and programs that allow you to set and send automatic reminders.
- Monitor your Numbers. Know your Average Collection Days. Work with your business advisor to set a Goal and monitor this Key Performance Indicator (KPI).
Don’t be a bank for your customers – they can’t get interest free loans anywhere else! And remember:
Revenue is Vanity, Profit is Sanity but Cash is King!
Ready to chat?
Whether it be a quick phone call, meet for coffee, or want to bash it all out in an email – Contact us today! No charge, no obligation.
In the last week of November, Xero will roll out their new navigation – Helping you get a simple, beautiful experience. This is so everyone can get on with daily tasks easily and efficiently. It’s based on research and testing with hundreds of people – Including...
Are you aware that as a director of a company, you can be personally liable for the ATO debt of that company? Yep - That's right! As part of the 2018 Federal Budget, the Government announced a package of reforms aimed at addressing illegal phoenix activity. One of...
Xero’s App Partner of the month for October is ServiceM8. ServiceM8 is smart job management software for trades and services, eliminating paperwork and improving productivity for small businesses. This is exciting news for us, as during Amy and Jess’s recent trip to...