Having a healthy supply of cash is vital for the survival of small businesses, as it is required to operate and enables you to pay workers, rent and other expenses. Unpaid invoices can lead to poor cash flow, a significant reason small businesses fail.
Late invoice payments can add to the strain of being restricted by limited resources. As a business owner, you should take the necessary steps to ensure prompt invoice payments and reduce your stress.
A structured collection process when it comes to chasing payments can provide a strong foundation to minimising losses as your business grows and can release thousands of dollars into your cash flow as a result of faster payments. By embedding certain practices into your day-to-day operations, the time dedicated to invoicing and chasing late payments is more efficient and effective.
Fast and correct invoicing is a great way to encourage faster payment. The earlier that you send your invoice will mean the client can make payments as soon as possible. Contacting clients after sending your bill allows issues to be addressed quickly. Checking if they have received your invoice and are happy with the services that have been provided is a good way to improve customer relationships.
Know your customer:
Staying up-to-date with changes within your industry can help a business to stay relevant and gain insights into customers. This awareness can help you to identify whether clients are experiencing a trading decline or financial stress, giving you the chance to take proactive steps before it can affect your cash flow. If flexibility is needed, agree on a payment schedule then confirm dates and amounts in writing. Keep in mind that your priority is the success and survival of your own business.
As your business grows, you should consider ways of creating a system that streamlines processes and improves cash flow in your business. If you require further assistance, consider consulting your financial advisor.