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Credit check your clients - I know it will be out of date information, but it helps.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