5 More Cash Flow Tips
There’s a lot of interest in cash flow for small businesses. After all, “cash is king”, right? So after our last article on better cash flow I went looking into my archives (I collect business articles – like I actually collect them, using Evernote – and yes, I know it’s a bit weird) to see what other resources and ideas were out there.
I found this article by the New York Times, from April of 2011. Definitely go read it for yourself, but here are my favorite tips from their article, with a few extrapolations.
- Set Terms
In the NYT article, they talk about negotiating terms. But what about actually notifying your customers of your terms? Are they verbal or written? Are they on the actual invoice (psss… if they’re not, they should be!)? Make sure your customers know the terms of payment, and make sure the terms are clear and followed, including by you.
- Dot the i's and Cross the t’s
If you’re working with commercial clients, make sure you know their terms. The article talks about whether or not PO numbers are required, even what file format the invoice comes in (does it need to be a .PDF?). But for residential customers, don’t forget about collecting signatures or confirming appointments if the homeowner won’t actually be home when you are on-site. Make sure the right people are aware of the work you did.
- Be Flexible
Remember to think about the relationship. Sometimes you’ll need to come down hard, other times you might want to be a little more forgiving. Just remember, you’re in a business: you have employees, suppliers, yourself, who all need to be paid. On the flip-side of the relationship coin, don’t feel bad reminding your bigger accounts that this is important. You don’t need to say it in so many words, but just show – with a smile – that you’re willing to go out of your way to make it happen.
- “The check is in the mail”
Riiiiiight. Push for accepting credit cards, use a faxed check service, or – for delinquents – offer to physically pick up the check.
- Consider Discounts
In many states it is illegal to charge more for certain types of transactions, such as a credit card. But you could (to my knowledge) provide a discount for a cash payment in a shorter timeframe (say 10 days). And you might want to cut a discount, for immediate cash or check, for some delinquent accounts. It’s not a good long-term policy, but it’s probably better than the courts when you need the cash.
Getting paid is a lot of work - no surprise there. But if you set up the right system, it can be at least a little