All businesses have their own set objectives and goals, but all businesses have one common goal as well: to maximise their cash flow as much as possible. In essence, the goal is clear: the more cash you have as a business, the better you are doing and the more profitable you will be. The concept behind managing your cash flow is simple as well – if you have more money and profit coming in than money or cash going out, then you’re set. But this is easier said than done, as any business owner will know all too well. It can be difficult for even the most seasoned business owners to balance their accounts receivables and payables, and it’s a challenge that can definitely drain your time and resources big time. But there are things you can do to manage your business cash flow more effectively. What are these ways, then? Let’s find out.
• Create a good process for accounts receivables
The first step for you to better manage your cash flow is to create a good process for accounts receivables. If you have a solid working process for managing your receivables, including the use of the proper tools and software, then you can more easily track as well as manage your assets and resources. This would also include being able to track as well as manage your business invoices.
• Come up with a strong policy for credit
If your business regularly extends credit to your clients or customers, then you need to make sure that you have a solid policy for credit as well. In fact, you should do this even before you begin selling your services and wares. If you can, come up with the proper billing process and terms early on, and add to this with the proper payment methods and forms, the right charges for interest (especially on late payments), and a good credit checking process.
• Make sure your invoices are as clear as day
The problem with sending out invoices is that some customers may have a difficult time understanding your invoice, and the process of payment is delayed as they question the invoice and voice their concerns about the invoice. The trick here is to create as clear an invoice as possible, one that your customers can easily understand. In addition, make sure your payment terms are as clearly defined as possible as well, as suggested by the expert accountants from www.gsmaccountants.co.uk. Here’s another tip: you may want to add more than a few payment options for your customers so they will be less likely to come up with the excuse that you don’t offer the payment option they prefer.
• For large orders, require upfront deposits or partial payments
If you have been contracted or tasked with providing a large order for a customer or a project which can take some time, it may be wise to require upfront deposits or partial payments as well. The deposit or partial payment is a way for you to protect your enterprise and alleviate the risk of you encountering problems with your cash flow. The terms you create should also clearly state that full payment is required once the job or project has been completed.