I gave a presentation about managing cashflow recently and one member in the audience confided to me that the issues I had highlighted were exactly the kind of problems he was running into. He would forget the all-important time factor: calendar dates will make or break your cashflow.
Have a cashflow timeline: when does money come in or go out?
As an example, he had been in a situation where he got paid €800, and received a bill for €600. Since he had the funds, he paid the bill there and then, even though it wasn’t due until several weeks. What he had forgotten was another bill for €600 – and that one was due immediately…
If you’ve been having one too many “facepalm” moments when you think “I completely forgot about this bill / that standing order / that their finance person was on holiday and couldn’t pay my invoice until later…”, having a timely projection will be your life saver.
Shorten your sales cycle by invoicing immediately
Another essential tip, but one we often forget, is to invoice immediately. I have often been a culprit myself in the past. You did the job for a client, so in your head it’s checked off – even though you haven’t been paid yet! Very few of us actually enjoy admin, and many of us don’t like asking for money, but prompt invoicing is one major factor in shortening your sales cycle.
While we’re on the topic of your sales cycle, study it in depth, to check whether you could speed it up and close gaps simply by reacting faster.
My own sales cycle is often very long and can last over a year, from the moment I first meet a prospect at a networking event, for example, until the moment they pay me. In between, I have opportunities to send a proposal, to follow up on the proposal, to revise the proposal, to close the sale, to organise delivery of my services, and to invoice for those services once they are delivered.
If I can be as effective and fast as possible during these phases, by following up promptly, I can tangibly shorten my sales cycle. Could you do the same in your own business?
In fact, I recently attended an IIBN event where the founder of Smiles, the dental clinic, told us that one of the key factors in their success was the shortening of their sales cycle. Ordinarily, it takes a customer 36 months from introduction to a dentist to bigger construction work. Through their methods and customer service, they narrowed this to 12 months and now the company is a £50 million per year business.
Be clear about credit terms and follow up promptly
And finally, be very explicit about your credit terms. State them on the invoice, and make sure you’re on the phone as soon as the terms are expired, if the client hasn’t paid yet. 90% of the time, it’s just that people are busy and they will apologize profusely and proceed to pay you immediately.
It’s very important to not be afraid to follow up: you have done the work, so you deserve to be paid.
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