Getting Paid On Time

Getting Paid On Time

One of the main areas of concerns for the managing Directors is cash flow. 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. 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. Diary your call backs and use your diary to remind you.

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. If the promise of payment is made then check it over the next 3 days and if it is not made, follow up immediately. If your getting nowhere on the phone, then start writing letters. We will be posting more about the content of these letters in the future.

5. 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.