Most businesses are struggling with the management of cash flows. Things were much easier in the ‘good old days’ because customers would strive to pay their debts on time. Having responsible clients is important because it will help you in managing your cash flow. Currently, the responsibility of cash flow management exclusively lies with the business owner among the other things that he or she has to do. Here are some of the top tips that will assist you to avoid poor cashflow practices.
- Doing Your Homework is Highly Rewarding
It is wise to assign a purchase order or contract for big clients. Make sure you identify their needs and the most appropriate payment terms in advance. For instance, some customers may want you to invoice them straight away because they have some cash left in their budget. Also, make sure you agree on pricing in advance with your smaller customers so that they don’t question your invoice. Get the mobile number of the contact person in the credit department of the company. This person will help you handle any quarries that you may have with your debtors. Make sure you have as much information as possible regarding the company before you begin to give them your products on credit.
- Do Not Delay
Make sure you prepare an invoice immediately you complete the job. It is also a good practice to take an upfront payment of at least 50 percent and the remaining to be paid after completing the work. Try the much you can to reduce the waiting time.
- Terms of Payment
It is always advisable to ask for what you are looking for. You can decide to include ‘pay on receipt,’ ‘payable within 30 days,’ ‘due within 14 days’ or any other terms that will not paralyze your operations. You are the one who understand your cash flow needs more than any other person. Remember you wull not get what you don’t ask for.
- Regularly Check Your Bank Account
You need to find out regularly whether your payment have gone through or are still pending. Most entrepreneurs prefer the cloud accounting software because it updates your statement on regular basis and you will be able to tell once the payments have been made.
- Never Be Shy
There are some instances when you don’t receive the cash that you were expecting. At such a time, you need to ring your contact person in the company with immediate effect to find out why this is the case. Don’t use emails because most people will ignore them. The contact person will chase the payment on your behalf and make sure that you get paid on time.
- ‘No’ Is Not an Answer
In case you don’t get a response, don’t get tired but keep trying. In some cases, you may even be forces to try calling several times a day.
- Cash Flows in Other Business Sections
You can also control your cash flows through suppliers and the business stock. Closely monitor your stock because perishable stock or slow moving stock can unnecessarily suck cash from your business. Check the credit terms of your supplier and make good use of them. Remember your suppliers will respect you and timely respond to your needs when you pay them on time. You cannot achieve this objective unless you manage your cash flow properly.