The world of business is very unpredictable. You may be going along thinking that everything is fine until you are suddenly hit by cash flow problems. The trick is to be prepared to deal with these problems rather than waiting for them to resolve themselves. And while there is no single right way of tackling this issue, there are a few methods that you can use to get the money flowing through the door once again.
Whether you feel like you need to start using some of these methods straight away or you just want to be prepared for negative circumstances before they arise, this blog is here to give you a helping hand.
Get Invoices Out Promptly
We all become frustrated by clients that require endless chasing to pay their invoices, but you need to make sure you put the ball in their court at the earliest possible opportunity by sending out the invoices as soon as you can. If you send your invoices at the end of the month and customers have until the 25th of the following month to pay you, this is a lot of waiting around. Try to reduce this waiting period to start off with, and if clients are still late, chase them up in a friendly and fair manner.
Increase Your Prices
No one likes increasing their prices, but sometimes you simply have no option but to do this. When people start up a business, they tend to price things fairly low to attract customers so the time may have come to start bringing these back up to a competitive rate. You may find that your material costs have increased or you are paying more to your staff members. Remember, you can’t operate your business successfully if you are working to such thin margins that you have no room to maneuver.
Change Your Accountant
If you have been using the same accountant for a while and they don’t seem to be helping you out in the way they once did, you could try consulting with some others. If they think that they have some methods that could help you out when you are in a tight spot, it may well be worth trying out their services. Investing in a good accountant is one of the smartest business moves you can make and it certainly doesn’t hurt to look around to see what other people are offering.
Work on Retainer
Rather than charging for particular services individually and having to wait until clients get round to paying their invoices, you may be able to work on retainer instead which guarantees a consistent amount of money coming into your account every month. If you run a business in a field where this is appropriate such as public relations, marketing, design or consulting, you may find that this option gives you a major helping hand.
Market to Existing Customers
Many business owners make the mistake of thinking that they key to their success is constantly getting new clients through the door. While this is obviously a positive thing to do, you should never underestimate the importance of selling to the customers you already have. So, you can start by marking them via email and social media, telling them about other offers that they may be interested in. Beyond this, you can offer special discounts and loyalty schemes that encourage their repeat business. Training your staff to suggest related products when they are making a sale can really make all the difference.
Secure Additional Financing
There are a range of ways that businesses can secure additional financing. If you have investors, you may be able to convince them to stump up some additional cash to help out – but they will obviously expect to see a clear plan about how they can get a return on their investment. Another option is to find a company that provides business loans, many of which you can apply for online today. And a modern way of generating some additional funds is by crowdfunding so that many people can invest in your business.
Diversify Your Payment Methods
Thanks to the internet, new methods of payment are coming through all the time so you can diversify your accepted means of receiving cash. For example, if a lot of your sales come online, as well as the standard credit and debit card payments, you may also look to accept other methods like PayPal. If you take payment methods in-store, you will want to make sure that you are ready to accept Apple Pay and Android Pay so that people have the freedom to pay you however they would like.
Check Credit Ratings
If you are making particularly big sales to certain customers, it can’t hurt to check over their credit ratings so you care completely comfortable that they are able to give you the cash for the goods and services that you are providing. It is also worth speaking to others who may have worked with that particular business in the past. See what they are saying and find out if they have had any trouble collecting payment in the past. It is always better to be safe than sorry.
Catch Problems Early
Rather than waiting for months and months to deal with a problematic client, send out late payments straight away if they have not given you any money before the next billing cycle. If the company still hasn’t paid, it is worth giving them a call to find out if there is any problem with their order or the service that you have provided them with.
Remember, in business, cashflow is king and you can never hope to keep running your company successfully unless you keep on top of this issue. Hopefully, these methods have given you a better idea of how you can do this so you can continue to run your business well and achieve all your aims.
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