How to get more cash – here’s 5 quick tips….
Author: Russell SmithMarch 12, 2012
Cash is the one thing that most business owners worry about.
I’ve seen many businesses in the position of struggling on cash whilst they have racked up huge amounts on the debtors ledger. Some of the worst positions I have ever seen is where the business owner is coy about being too aggressive in asking for the money through fear of losing the customer whilst struggling to pay the bills.
Frankly, if a customer doesn’t pay you, I’m not sure its a customer that you want. BUT…..before we write them off, we’ve got to make sure that they know that they owe. Here’s 5 quick tips to get more cash in:
1. When you make the sale, make it as clear as possible about the payment terms. Any miscommunication here, or lack of clarity will more often than not result in problems down the line
2. Invoice as quickly as possible. You may invoice on the completion of the job. It’s often better to invoice at the beginning of the job to flush out any potential issues and to avoid forgetting to invoice altogether (this can happen)
3. When you recognise a sale in the business, don’t recognise it unless the fee AND the payment terms have been agreed. This avoids the situation of ‘Hey, I’ve just won a £5k sale although I haven’t clarified when it will be paid’ – this is just asking for trouble
4. Try and get the best payment terms possible. In my book, this is payment up front before work is completed. I’d use this as a starting point and go from there i.e. don’t start with 90 days.
5. The single best method I have ever seen at getting more payments is direct debits. These are way more flexible than standing orders and makes it very easy for your customer to pay you (this really is a win/win since your customers do want to pay you and if they can pay you without them doing anything, they will really value this).
My final tip is with all of the sales, delivery and marketing in your business, don’t lose sight of cash, keep on top of it and never be afraid of asking for payment.