Here’s the thing: If you want your business to be successful and profitable in the long-term, you have to improve your cash flow. This goes beyond generating sales, though; it’s also about engaging with your client base so that they not only want to support you and invest in you but also become repeat customers!
According to a recent study from the US Chamber of Commerce, a staggering “82% of small businesses fail due to cash flow problems,” making this one of the biggest issues when it comes to being a small business owner.
Whether you’re new in business or have been running your company for years, here are a few tips for improving cash flow (without losing your mind in the process).
Make it as easy as possible for clients or customers to pay you.
One of the easiest ways to improve cash flow in your business is to make it as easy as possible for your clients to pay you.
If you’re running an international business and/or have international clients, you should be sure to accept payment in a range of different currencies. Regardless of whether or not you have international customers, the benefits of accepting multiple currencies are numerous, as this diversifies the payment process and makes it simple for people (regardless of location) to invest in you.
You can also make payments more acceptable by accepting a range of different types of payments, from bank transfers to cash payments.
Break down larger payments into more manageable sums
If you are expecting a large sum of money from your clients or customers, you may benefit from breaking the total fee down into several, more manageable chunks. This makes it easier for the customer to cover payments in their monthly budget while ensuring that you are paid for the goods or services you provide.
However, you should make it clear when each new payment is accepted, ideally in writing. This helps when it comes to accountability (and making sure that all contracts are followed, too).
Chase & clear up late invoices
Chasing and closing the circle on late invoices as quickly as possible can also help to improve cash flow and put you on the path to greater business success.
Before even chasing a payment, be sure that you have clear contracts and information regarding late payments to ensure that when you run into problems, you’re covered.
When someone doesn’t pay on time, try to give the recipient the benefit of the doubt. They may simply have forgotten to process this payment. Be polite, but formal and let them know that if the invoice is not paid within a certain period, then interest will be added to the total amount of money owed (or be clear if that’s already happened because of your payment policy). You can use an online calculator to determine what interest rates you should apply.
Generally speaking, you should send an invoice reminder the day the payment is officially classed as late (typically after a day). From there, weekly reminders can be helpful (with added interest, of course).
Hire an accountant
Hiring an accountant can also help you to improve cash flow within your business because they’ll be able to quickly identify the areas in which financial management you are currently mishandling. Their guidance will eliminate these errors, ensuring that your business continues to thrive!
When you hire an additional employee (or outsource any aspect of your business in general), it comes with an additional price. But, remember that it takes money to earn money, and sometimes investing in methods to make yourself more profitable are worth it!
Featured Image Credit:Andrik Langfield