It’s no secret that strong and speedy cash flow is the driving force behind the growth of any start-up. If customers aren’t paying soon after they’re invoiced, you can’t afford to make the investments required to scale your business.
Unfortunately, the best way to improve cash flow is get customers to pay quickly, which isn’t easy. Especially if your company is working with other cash-strapped small businesses, you may notice your invoices are being ignored to the point where you are essentially lending customers money. In a recent post at Inc.com, User Insight CEO Eric V. Holtzclaw offered seven recommendations for getting paid faster and improving cash flow, a few of which we’ve highlighted below.
The easiest way to incentivize customers to pay you is buy offering some sort of discount for early payment. Spinning early payment a rewards program makes it a win-win program for your business and your customers. And don’t hide this offer in the fine print; make customers aware of the reward they’ll receive for prompt payment by displaying in plainly on contracts and invoices.
Another way to catalyze your cash flow is by using online payment systems. We’ve written about the benefits of such systems before, so I’ll keep this short: online payment systems like bill.com (read our Cool Tools page for more info) expedites the invoicing and payment process while also saving you time and money.
Before you even start the invoicing process, talk to your customers about their financial capabilities so you can better understand the situation from their point of view. You may find that they simply don’t have the kind of cash flow to front a big sum. If this is the case, invoice them for small amounts multiple times instead of issuing a single, large invoice. Many businesses feel more comfortable paying smaller amounts because it doesn’t bust their budget.
If none of these tactics works, you may have to resort to delaying the work. This isn’t in anyone’s best interest, but no business can afford to be doing work for which they’re not getting paid. Oftentimes the mere threat of stopping work done for a customer will be enough to get your money.
Don’t have the time to chase customers around asking for money? Contact one of our outsourced accounting experts today!