The importance of having a steady cashflow is well advertised in today’s society, whether it’s for borrowing money, growing your business or just simply keeping your business going. If you’re looking to grow your business, banks won’t lend to businesses that they don’t deem creditworthy in fear of never being repaid. Interest rates are going up with damaging terms and conditions being brought down on the heads of late payers, and there is a list of things you need to prove as a business to be granted any credit from the banks.
Having no credit history is now arguably as damaging as having a bad one; banks need to know how you handle repaying money you have borrowed and how you balance your books at the end of the month. In order to keep your business afloat you need to have a steady cashflow.
If you are looking for some finance, or if you just want to steady your own cashflow for the sake of your business, we have 5 great tips on how to do so!
Clean up your customer base and eliminate bad payers
Have a good look through your customer base and previous invoices and work out who was slow or late paying you. Or, use our 3D ledger to prioritise your cash collections. It amalgamates your sales ledgers with company credit reports, so not only will you know who needs to pay you, when and how much, you will also know the risk of this company with instant access to their credit report through 3D. You can filter these results through country, size, turnover, etc. which gives you an international view on every company you are dealing with. If a customer hasn’t paid you at all, stop doing business with them. Having a customer less is better than having a customer who is taking your services and not paying you for them. Don’t just eliminate the people who aren’t paying you either. If there are customers who are continuously withholding payment from you and they are disrupting your cashflow to the point where you are paying your own bills late, cut them loose. It’s better to have a smaller customer base that are consistently good payers than having a larger unpredictable one.
Pay your bills on time
Steadying your cashflow to consistently pay your bills on time will build a good credit rating and good trade payment data. Creditsafe company credit reports now give information on trade payment data, so if a company that you want to do business with credit checks you, they will see how good you are at paying your bills. If you’re a bad payer; you could lose the business deal. Not only that; paying your bills on time will also help you avoid the slippery slope of debt. If you are already in a lot of debt that you’re struggling to pay back, talk to your creditor and see what can be done to help you repay the money you owe easier. Communication is key, and there is no shame in asking for help. Set up an automatic minimum payment to go out every month, this may take you longer to pay off your debt but at least you are chipping away at it.
Only target creditworthy customers
One of a businesses’ main focus is getting new customers through the door, and quite rightly so! A business needs to continue to bring money in to survive, but what happens if that money never gets to you? By agreeing to do business with uncreditworthy companies, you are putting your business at risk of not being paid for services you’re providing. If you’re looking for companies to target, Creditsafe offer Marketing Prospects that have already been pre-credit checked, so you can rest assured that if you target them for new business, they are creditworthy enough to be able to consistently pay you. A tip from us- continue to monitor customers even after you have signed a contract with them. Circumstances can change and when a company was creditworthy at the start of your contract, six months down the line they may not be. Put all your customers and suppliers into our Risk Tracker and you will get updated every time anything changes on that company’s credit report.
Cancel unnecessary debts
There are debts that pay for things that your business needs to have and then there are debts that pay for things that your business likes to have. For example, if you work in an office based environment; your office rent, Internet, telephone bills and Council Tax are all things that your business needs to have to run. However the tab at the local coffee shop, doughnut deliveries, or a subscription to Sky TV in the office are all things that a business would like to have. If you feel that you are struggling with these payments and the money could be used better elsewhere, such as paying off debt; cancel them. Rewarding your staff with little treats is always a good idea to show appreciation and encourage a good work ethic, however only do it when you can afford it. Don’t have something solid set up that will cost you money consistently every month, as some months the money may be better used elsewhere.
Save as much as you can
We know how difficult it is to save money, in business or out. When you’re concentrating on running a business and trying to grow it, it can be very difficult to take the slower route in order for you to save some money along the way. We can’t recommend saving enough, as any problems can just pop out of nowhere. For example, a big client could go bust, leaving you without their payment or you could lose a long lasting deal you expected to retain; so always have a backup plan for when things don’t quite go your way.
Hopefully these top tips will help you get your cashflow back on track, and with the help of a company like ours, things like credit checking and risk monitoring can help you protect your company’s cashflow.