Cash can kill a business. Well, a lack of it can.
In recent weeks a number of clients and friends shared with us concerns about their cash flow. While some are putting it down to election concern slowing down business, we prefer to “control the controllables” as the top athletes say.
Focus on what you can control, not what’s happening “out there” in the economy, outside of your control.
When it comes to your cash flow, the more you focus on “the controllables”, the less you will stress when it comes time to pay the bills.
Let’s look at three ways you can help your debtors—the people who owe you money—to pay you faster and more easily. In accounting lingo, this is termed “reducing your debtor days”.
Keep a track of your debtors
A nice and easy one first up. You are not a bank.
You don’t exist to fund your clients’ businesses and lifestyles through interest-free loans.
To avoid becoming an unpaid bank, make sure your accounting system is kept up to date, to the day. Many businesses get a bookkeeper to come in once a fortnight or once a month. That is too much grace to give to clients if they haven’t paid.
Late payers need to be followed up promptly. They’ll respect that, and they’ll pay you sooner.
We recommend Xero accounting software for easy and almost automated accounting for debtors.
Create systems to efficiently follow up your debtors
We can help you implement systems which will automatically send a follow up email to any debtors who fall overdue. Nice. Chasing up debtors while you sleep. Once set up, this requires very little maintenance.
Give multiple payment options
Nice and simple.
Giving your clients or customers multiple payment options means that your debtors have less of an excuse for late payment.
Options such as Visa and MasterCard should be given, and venturing into realms of American Express or even Fee Funding services add other attractive ways for your clients to pay you. Again once set up, this requires no maintenance at all.
Treat this article as a checklist for implementation. If you have not set up each of these systems, let us know and we’ll help you make it happen.