Cash flow management is critical for small and medium businesses. It’s the lifeblood of your company, it keeps business ticking over, and it needs to be managed carefully. Cash flow problems generally come down to one thing – cash coming in too slowly, and going out too quickly! Encouraging customers to pay quickly, while delaying outlays of cash, will provide a more constant cash flow. But as we know is not always that easy to achieve. There are several ways to do this, and it’s important to get it right from the start.
1. Plan your cash flow – ins and outs
It’s impossible to project your cash flow exactly as sales can fluctuate due to a number of reasons, but an estimate can allow you to project future trends. How much cash do you need to have in order to carry out your business, pay staff and suppliers, and make a profit? How much cash will you be receiving, and whether a cash flow finance facility might be a good option to cover the gap of slow payments? You’ll also need to take into account variables like seasonal dips and peaks and determine all those amounts to budget accordingly.
2. Invoice promptly
Make it a habit to invoice your customers as soon as the job is done, rather than at the end of the month. Also ensure your invoice is easy to understand and your bank account number is visible.
3. Establish clear payment terms
Be clear about your payment terms, whether it’s seven, thirty, or sixty days, and include an action plan if payments become overdue.
4. Follow Up
Another way to improve slow payments is to follow up on accounts that fall outside your terms. With Key Factors cash flow finance the follow up of accounts is a part of our service, at no extra cost.
5. Consider factoring your invoices
Invoice Factoring can improve your cash flow by unlocking the cash tied up in your account receivables. This is where Key Factors can help. Send us your invoices, and we can pay you up to 80% of the invoice face value immediately – in as quick as 24 hours – so you don’t have to wait 30, 60 or even 90 days for your client to pay. You will receive the remaining 20% less our fee, when your client pays the invoice.https://www.keyfactors.com.au/services/factoring/
Key Factors can help manage your accounts while providing you with a constant cash flow. This allows you to focus on doing what you do best, which is growing your business. Get in touch with us today, and find out how we can help you.