I have worked in various businesses over the years, and one of the main areas of concerns for the managing directors was cash flow. “Lets Get Paid On Time” is what one ex-boss shouted at us. Some business owners manage cash flow beautifully, and some plod along and seem to get through. If you proactively work on getting your cash flow system working for you, it can reap rewards. Here are a number of ideas you can quickly implement in your business.
1. Have a System
Its the foundation of good cash flow management. Many systems are now cloud based which in truth are more secure than having it on a pc in your office or on word documents and spreadsheets. Ensure its the right one for you and your business. At a minimum it should invoice for you, manage purchases, and give you good reporting function.
2. Be Firm
The more lenient on Debtors you are, the more they will think you don’t mind extending credit. Be kind, professional but firm with collection.
3. Credit should not be assumed
Remember, if you don’t have payment terms then Debtors will take as many debtor days as they can to get paid. Make sure you can easily invoice, and send out your statements at the start of each month. If you are putting in phone calls, have a system. Do it consistently each week/month. If one of your clients when to get a loan, they would be charged interest. If your giving 60/120/180 days to pay, its free credit!
4. Follow up
If the promise of payment is made then check it over the next 3 days and if it is not made, follow up immediately.
5. Make Notes
Your bookkeeping system (Cloud or not) should have the facility to make notes. Make these notes on conversations you have had with clients on collection of monies. Refer to previous conversations when following up multiple times.
Finally, its important to remember that many businesses may be competing for a clients money. The business who has implemented the best system gets paid first, and will ultimately manage cash flow with success.
About Mark Hegarty: Mark Hegarty is founder and Managing Director of www.eFolioAccounts.com helping business get paid on time. eFolio Accounts is a simple, unlimited set of tools to invoice, manage cash flow and cut debtor days.
Mark is also founder of Irish Formations. www.IrishFormations.ie an independent company formations agency delivering cost effective ways to incorporate companies for Accountants, Solicitors and Company Directors.
Mark was Chairman of the South Region of the Marketing Institute in 2008 and served 10 years on the board. After working in Marketing for Fota Wildlife Park Mark worked in Financial Services administering www.petinsure.ie Ireland’s 2nd Pet Insurance company.