Business Credit News

How to Improve Your Cash Flow

A steady cash flow is the lifeblood of your business–and getting paid in a timely manner could mean the difference between success and failure. To ensure you’re maximizing your collection techniques, try these quick tips:

1. Don’t wait to bill. Creating and sending an invoice takes minutes to complete. Today, sending an invoice by e-mail is perfectly acceptable (and in many cases preferred). Find out exactly who the invoice should be directed to and what information they need (such as a tax ID number). Ask for a “read receipt” on the e-mail, and send it ASAP.
2. Offer incentives. Give the client a small discount if they pay within 30 days and a larger discount if they pay even sooner. They’ll appreciate the discount and you’ll appreciate the cash flow.
3. It’s late! When a payment doesn’t arrive on time, get in touch right away. Find out if there’s a problem and be friendly, but firm. Can you set up a payment plan for the customer? If they haven’t paid, it most likely means someone hasn’t paid them. Be understanding, but if they miss another payment, follow up again.
4. Dump the deadbeats. Not to be harsh, but you really can’t afford to carry clients that are consistently paying late or not paying at all. Explain that you need to stick to your policies and move on.
5. Call in the experts. If the amount owed is big enough to make the expense worthwhile, consider using a collection agency. They’ll take a percentage of the amount collected, but something is better than nothing. To find a reputable agency, contact The Association of Credit and Collection Professionals (ACA).
6. Look into factoring. Factors buy your receivables and immediately give you approximately 80 percent of what you’re owed. They keep the remaining percentage on hold until they collect the receivables. Once it’s paid in full, they pay you the rest minus fees. Contact the International Factoring Association for more information.
7. Consider bartering. If a client is having trouble coming up with the cash to pay you, but sells a product or service that could benefit your business, you may want to offer a barter agreement to pay their debt.

David Gass
Founder, Business Credit Services, Inc. &
Earn.com Expert Advisor

Tags: business cash flow, business collections, cash flow, collections, Small Business