For all businesses cash is king, and one way to help ensure that there is always the funds that you need, is to keep a close eye on your credit control. It sounds obvious but it's amazing how easy it is for scrutiny and standards to slip when you're a busy business owner or director.
Move to the cloud
Gone are the days of paper accounting. In fact, desktop accounting is rarer and rarer – that's because these systems don't allow the same level of accuracy that cloud software now affords you. Multiple users from a business and their accountant can all get up to the minute reports on the state of the coffers. And of course, what that means, is that it's much harder to suddenly find yourself in a sticky situation.
The features work on-the-go as well – you can raise an invoice on your phone, automate expenses and everything is effortlessly reconciled. With providers like Xero, the features don't stop at accounting – an online marketplace offers users a whole range of other integrated products including loans and payroll. Other market leaders like Quickbooks or Sage 50 cater for larger businesses and also have a whole host of partnerships and extra features.
Run a tight invoicing ship
There are some best practices in credit control that are often either overlooked, or not enforced in the way they should be. Good or bad credit control can have a massive impact on the health of your cash flow so make sure that anyone you do business with understands your terms clearly. State them boldly on invoices and communication and make sure you have a process that makes it as easy as possible for your customers to pay you.
Have a clear staged escalation process for missed payments – be reasonable but not soft. Communication is key here.
Make sure that you lead by example and always invoice and pay on time – that way it is easier if you do need to chase payments more aggressively. There are new digital tools that can help you with this such as Chaser and Satago. They work in conjunction with your cloud accounting software and automatically chase and issue invoices on your behalf using a series of pre-scripted emails that you can programme.
Long payment terms might be the initial reason for your cash flow headaches – but if carefully managed they shouldn't cripple you.
Great business is about people. Build a rapport with the accounts teams in your customer or supplier's offices. People buy from people. People prefer to deal with people. You are much more likely to get what you want if you take the time to get to know the person on the other end of the phone.
Equally, regular contact and good communication makes financial surprises far less likely and much easier to manage – and you’ll find that those businesses that you have a good relationship with will be much more understanding if you ever need a little bit of leeway. Even if you have automated your credit control systems, there’s nothing stopping you picking up the phone to check that they received your goods. Good customer service goes a long way. Were they happy? Then at the same time you can check up on the payments too.
Using invoice finance is a great way to improve working capital and take back control of your cashflow. By using an asset that your business already has – invoices – you can use Invoice Finance to receive funding based on money you are already owed. You will receive a regular monthly amount, rather than your money owed coming in dribs and drabs and risking a cash shortage.
You can use the funding to realise your business goals and make expansion plans, meet payments or tackle long payment terms. Get in touch with Sam Percival today. With over five years as a credit control expert and extensive experience in business funding he can advise you and help you find the right product for your business.