Cash is king: 4 ways businesses can improve cashflow
Cashflow issues are often cited as the number one reason why small businesses fail.With this in mind, here are four tips to help you manage your business' cashflow better.
Know your customers
All business is good business, right? Well, not necessarily. Before agreeing to supply goods or services to a customer on credit, business owners must first check their credit score to determine what payment terms to put them on.
By only offering credit to customers with a low risk profile, business owners can avoid late payment and bad debt later down the line.
In challenging times you may find that even loyal customers struggle to keep up with payments. For this reason, it’s a good idea to run up-to-date risk analysis on all existing customers. This way you can agree credit terms that works for both you and them.
Get paid on time.
Easier said than done. But believe it or not there are some simple hacks that can significantly reduce your debtor days.
Always send out invoices immediately after agreeing a sale or completing a piece of work.
Format invoices clearly, make sure you highlight the due date and any late fees that will be incurred if customers fail to pay on time.
Make it easy for customers to pay you. Find our their preferred payment method (card, BACS, cash) and adjust your collection process to suit them.
Start sending reminder emails 7 days before an invoice is due. Make sure your reminders contain all relevant information, including a link to the original invoice.
Send monthly statements to your customers so they have an up-to-date record of what they owe and thank you emails once they have paid you. This regular communication helps establish a positive relationship and aids timely payment.
The easiest way to keep on top of your payment reminders is to automate the process. With Satago, you can set automated reminders, monthly statements and thank you emails for each customer, making debt collection easy.
Negotiate your overheads
At its simplest, cashflow management is about money in versus money out. If you can reduce your overheads without compromising on the quality of your services, your cashflow will improve.
One way to achieve this is to negotiate. Are you in a position to pay your suppliers early? If so, they may be willing to offer you a discount.
Alternatively, if you’re currently experiencing cashflow problems due to COVID-19, your creditors may be happy to let you defer payment until business improves. You won’t know unless you ask, so make sure you pick up the phone.
Consider taking on finance
Some business owners are reluctant to take on finance. But, once you understand the different options available, acquiring finance needn’t be a daunting prospect. Done right, it can ease cashflow worries and facilitate the healthy growth of your business.
The best option is to speak to your accountant, who can advise you on the different options available to you—from a business loan to invoice finance.
With Satago, you can access customer risk insights, automated credit control and invoice financing all in one easy-to-use platform. So, you can understand your customers, get paid on time and access finance if you need it.
To learn more about how Satago can help your business, book a demo with our team.