Maintaining a healthy cash flow is one of the biggest struggles for businesses across the US. You have no doubt heard the saying ‘cash is king’, and this is undoubtedly true when it comes to your company. It is the lifeline of your business, yet it can be extremely difficult to manage. If your customers do not pay you on time or you have not paid your bills smartly, you can find yourself in an extremely tricky position. To minimize the chances of this occurring, read on to discover some top tips.
One of the main reasons why businesses suffer from a poor cash flow is because they have made it too difficult for their customers to pay. You need to give your customers several options to choose from, and one of these options should certainly be paying online. Online payments are easier, faster, and simpler for both you and your consumer. Moreover, by giving your customers a broad scope of payment options, you minimize the potential for them to claim that they are having trouble paying you via a certain method.
You also need to ensure you issue invoices on time and that you send payment reminders when required. This may sound obvious, but you would be shocked by how many businesses fall short when it comes to this. This is because time seems to run away with us, and it can be easy to fall behind on sending your invoices to your clients. However, if you do not send invoices on time, you are simply delaying the procedure, and you will have to wait longer to get the money you need. The best thing to do is have one individual at your company that takes ownership of issuing invoices.
Furthermore, make sure you implement payment terms with your customers from the offset. You both need to be fully aware and in agreement on the terms and conditions for payments. Perhaps you can agree on a date where your customer pays every month? At the least, establish the maximum time they have to pay the invoice in question.
Aside from this, you need to make sure you pay your own bills smartly. This is where your cash flow management skills will really be put to the test, which is why it is advisable to use the services of a chartered accountant. They will be able to provide you with a cash flow model to assist you with this. You need to be smart with regards to the timing of when you pay your own invoices. You must ensure you do not pay them all at once. Spreading payments is vital. Don’t pay all invoices as soon as you get them either. You need to strategize carefully when it comes to this. You may even be eligible for tax relief, which can boost your cash flow. Check out https://creativetax.io/ for more information.
Last but not least, the use of software is vital to ensure that your data is accurate and mistakes are minimized. This will also boost efficiency too. There are many accounting software options available, and this is something your accountant will be able to assist you with.