If you’re like most entrepreneurs, you’re probably driven by more than just money. Most of us like the fact that running our own business allows us to create our own future, set our own salary and to express our creativity. Success in business, however, requires a good grasp on cash flow – and the ability to pay your bills, staff and meet your expenses each month. Without a steady flow of cash your business could really suffer. (There are countless stories of businesses that died because they were asset rich and cash poor or because they simply ran out of cash!) Here are six ways to improve your cash flow:
- Take Part Payments and Deposits You’ll often have expenses (supplies, for example) that you will have to pay for up front before you can deliver your product or service. Find ways to take a deposit (or full payment) up front for a product or service, especially if yours is a long sales cycle. Most customers will be amenable to this if you’re really clear up front on how you operate.
- Make Your Terms Clear Even when dealing with government agencies and large companies be sure to let them know your terms of payment and then be meticulous about following up when your payment comes due.
- Incentivise Early Payment Offer discounts for early payment – an incentive that many of your suppliers will find attractive. Of course ensure that you’re not losing money by offering a discount and that the numbers stack up. This tactic can get money through the door quicker!
- Pay Only When You Need to (and Be Smart About it) There’s no need to pay bills before they are due (unless you’ve had advice from your accountant to do so). Schedule payments to be paid as they are due. Remember effective credit card use can buy you time. The smart use of your cards (check details with your bank) can extend your credit and keep the cash in the bank longer – releasing it only when you need to.
- Offer Customers Payment Options Be sure to take all sorts of payments and sign up for a merchant account. Customers want to, and expect to, be able to pay on the card of their choice and by direct debit. Sure, you pay a small fee but you’ll ultimately keep customers happier which could lead to more of their dollars spent with you instead of the competition.
- Have Efficient Money Systems Invoice customers quickly. The sooner you get your invoice on their desks, the better. If you’re not great with numbers, or find yourself neglecting this job, get the help of a bookkeeper who can issue invoices on your behalf, and speed along the payment of them.
There’s also no need to mail an invoice these days. Most companies will accept invoices by email and PDF. Check ahead of time. And, be discerning with who you offer credit to. A credit application form will give you credit information and ask for trade references. Be sure to not only ask for references but also to check them! With ANZ, you can get your card sales in your ANZ business account the same day, 365 days a year – including weekends and public holidays. You get fast access to your takings, 365 days a year including weekends and public holidays on transactions settled before 6.30pm. This helps you manage your business’ cash flow more effectively. Talk to your local ANZ Small Business Specialist about ANZ Same Day, Every Day Settlement today. Any advice does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you. ANZ recommends you read the Terms and Conditions and the Financial Services Guide (PDF 104kB) before acquiring the product.
