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  • Writer's picturePaul

Coronavirus 6 - How can I get my cash in quicker?

Along with working out what to do with your work-force the current biggest issue is cash, or to be more precise the amount of money in your business bank account and not sitting in someone else’s.

Here are a list of actions that I know can and will work to help the cash flow into your business:

  • An active and targeted debt collection process - I hear too often that people only chase their money after it is due. Try this  28 day payment scenario:

Issue invoice  Day 7 - have you received my invoice? Day 14 - are there any queries on the invoice? Day 21 - are there any reasons why we shouldn’t expect payment next week? Day 28 - receive payment and say thank you or you are ahead of the game to chase.

  • Build relationships with accounts departments - know their names, what they like and enjoy, say thanks when you get paid. People are nice to people they like.

  • Invoice on time  - I often see people who only invoice at the end of the month - you may have already given 30 days credit by doing this!

  • Know your contracts and invoice dates - particularly if you are in the IT or construction industry.

  • A realistic and live cashflow document - this is the most important document a finance department can give you, not the P&L, management accounts or balance sheet.

  • Factoring (not one of my favourites, but it can work)

  • Reward/discount for early payment

  • Payment by credit card or GoCardless 

  • Direct Debit

  • Credit check your clients - I know it will be out of date information, but it helps.

  • Prepayment (pro-forma, the above may help with you decide)

  • Reducing  your own credit terms

  • Charge interest on late payment - you are entitled to. 

  • Subscription

  • Interim payments - front end loaded

  • Give your credit controller KPI’s and targets to hit and meet

  • Have a query resolution process

  • Don’t threaten legal proceedings unless you mean to carry it out - going legal often gives people more time and wriggle room

  • Regular project management reviews that includes payment on the agenda

  • Have an established escalation process

  • Send statements ahead of payment due dates

  • Increase sales to clients with good credit

  • Stop working with people who treat you poorly and don’t pay - this may sound glib, but it shows that they don’t care about you and your business

  • Educate sales people to target potential clients that pay

How much of the above do you do?

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