So how can you keep on top of it? As well as keeping on top of your own books, you are also in the hands of your paying customers – it’s a juggling act, it’s true. However, here are some of our top tips on successfully managing your cashflow.
Issue Invoices Swiftly
As soon as the job is finished invoice! Don’t hang around for weeks, even months. Keeping on top of outgoing invoices is a major factor of keeping on top of your cashflow.
Did you know that 25% of all issued invoices are wrong! This will massively delay payment and therefore affect your cashflow. Check, double check and triple check if needs be.
Transparent Payment Terms
Make sure your payment terms are 100% clear and transparent – whilst it won’t deter all your clients it will mean you can start chasing for payment sooner, and the sooner you start chasing the sooner you’ll be paid!
Negotiate Payment Terms With Your Suppliers
How can you pay your suppliers within 14 days if your own payment terms with your customers are 30 days, for example? Try and negotiate longer terms of 30, even 45 days.
Are you aware of your own business peaks and troughs? Periodic highs and lows can have a massive impact on cashflow – your product could be seasonal, summer months combined with annual leave etc. can all have a detrimental effect on your cashflow.
Manage Your Stock Inventory
Most businesses need and hold stock. However, are you holding too much? Could you reduce your stock levels to manage your cashflow? Do you need to buy, for example, an entire year’s worth upfront if you can reorder (without effecting delivery and productivity) every 6 months? It could be you can reduce your upfront costs, yet as a knock on effect also reduce warehousing charges?
Consider Invoice Factoring
All businesses suffer the ill effects of late paying customers. This can cripple a business – money is going out on supplier and overhead costs all too quickly but all too slowly is that money coming back in. With invoice factoring (also known as invoice finance and invoice discounting) you will be paid up to 90% of each issued invoice within 24hours. The balance of which is paid once your invoice is paid in full by your client. Costs are very competitive and bring peace of mind to many businesses – established and start ups.
Effective Credit Control
As an SME owner the chances are you are looking after all areas of your business – including credit control. However, whilst this role is vital, it’s also time consuming. You can’t be running a business and chasing invoices at the same time. Look at either a rigid and fool proof purchase ledger system, contracting an expert or, alternatively, with invoice factoring this will be managed for you as part of the factoring facility.
As the UK’s first truly independent broker, Capital Corporate Finance has been helping businesses for over 25 years. We are experts in the alternative finance, banking and loans market. With access to the whole of the market we guarantee to find you the right finance for your needs, delivered with the human touch.
So get in touch today – call 07785 596053 or email email@example.com