Some say that content is King, but that’s mainly marketers. For business owners and managers, cash flow will always be the number one priority, you can’t do anything without the money continuing to come in. However, what can you do when that flow is threatened or stops? What things can you put in place to prevent it happening at all?
There are many routes a business can take to reduce their exposure to payment risk, this can include not extending credit at all and using cash only and/or card transactions, potentially using sites such as PayPal to protect both parties. It could also mean using credit checks and company credit reports to ensure that the company you’re doing business with is truly creditworthy and can pay your invoices. For many business owners, it’s about doing what’s right for their business, but sometimes the right way doesn’t always work out.
So how can you improve your cash flow?
- Give customers a choice. So that you can get paid quicker, why not give your customers multiple ways to pay – whether it’s upfront or by invoice? It seems obvious, but alongside cash and card, you can still accept cheques, as well as offer BACS details and direct debits
- Pick up the phone. It could be that your customer is waiting on a payment into their business, causing them to miss your payment terms, so instead of getting irate or sending a chase email, give them a call. A quick conversation will mean a quicker resolution
- Spring clean your payment terms. Take a look at the payment terms you offer customers, do they vary? Are they met by the customers? It might be worth looking at whether they need tweaking slightly. Don’t get complacent, if your business needs a quicker turnaround of payment, alert your customers that there might be a change in their terms
- Ask awkward questions. So you’ve got a new customer who wants an account, but they’re being a bit shady about some of the questions you’re asking. Don’t be afraid to keep insisting on an answer, you can withhold credit until they give you the information you need
By knowing your customer, whether they have had a positive or negative change with their business, can make the difference to your own company. This is where having good relationships with your customers matters; they will feel comfortable discussing those changes and whether that will impact on their payment abilities. It’s about maintaining an open channel.