There are times when business owners’ look at their bank account and worry about how they are going to pay their overheads this month. Cash-flow worries is one of the main reasons business owners lay awake at night. Sometimes it is hard to see the proactive way forward to resolving cash-flow problems. So here are 5 quick and simple ways to get cash into your business.
1. Recover aged debts
How many customers haven’t paid you yet? Are there any customers who are not responding to your requests for payment? Look through your accounting platform and run an Aged Receivables ledger. Export it into an excel document and highlight all those customers who are in the columns labelled 60+, 90+ and over. These are the customers to contact first to request payment.
Send them a polite reminder by email requesting payment today. To save time, attach either a copy of the overdue invoice and/or a statement of account.
Call any customers who have still not paid you by your given deadline and again request payment. If they don’t answer or don’t come back to you on the same day, your next step should be to run a credit check, (if you haven’t already done so).
Running a credit check will provide you with the financial information about your customers business, so that you can make an informed decision on how best to proceed. If the credit score is healthy, perhaps they need a 1st, 2nd or final reminder notice? If the credit score is low and financials are looking bad, it’s time to send this to a debt collection company.
At FJCM we find that most of the time people just need a polite, but firm letter or call from a third party to encourage them to pay. Debt collection is not aggressive or invasive when it is done correctly.
This is a great way to get a cash flow boost.
2. Call customers who you’ve already invoiced
A few days after invoicing your customer, give them a call to confirm they have received your invoice. Ask them if they are able to pay today? If they can’t, ask for the payment date, make a note and use this information to ensure payment is made on time. This is basic but effective credit control.
Having a good credit control process is essential to getting paid on time. It helps keep debts owed to a minimum and reduce business risk by ensuring your customers have means to pay you.
Here are some slightly longer term approaches to focus on.
3. Increase your prices
When is the last time you increased your prices or had a ‘price adjustment’? If this makes you worry, don’t! If your customers like the service or product you provide they won’t mind you increasing your prices slightly.
Before you dismiss this idea, work out your figures. Know that people don’t always buy from the cheapest company, many people know that “they get what they pay for.”
if you don’t want to increase prices for your existing customers, perhaps consider testing out increased prices on new enquiries first.
4. A, B & C customers – Get rid of your ‘C’ customers
Imagine your customers in categories of ‘A’s, B’s & C’s ,write it down if it’s easier.
- Your ‘A’ customers are your best ones, they spend the most, pay on time and they are a pleasure to work with.
- ‘B’ customers are good too, the spend good money, pay on time, no trouble to work with.
- However, your ‘C’ customers are a nightmare! They call all the time, waste your time, hardly spend any money, change their mind and they drain your energy. ‘C’ customers take your focus away from your ‘A’s’ and your ‘B’s’!
Do any of your customers take up too much of your time for the amount of money you are earning from them? If you have a nightmare (C) customer who you dread speaking to, now is the time to say “thanks, but no thanks,” and move them on. If your customer is costing you time, energy, money and stress, don’t be afraid to move them on. “When one door closes….”
5. Contact existing customers
It is easier and more cost-effective to sell to your existing customer base than it is to attract new customers. So call or email your existing customers and ask for more work or see if they need more of your product/service. You could also ask them for referrals too!
The main thing is to be proactive and do something about your cash-flow to get cash in to your business.
That’s a wrap. We hope the above helps you, but if you are finding it challenging, contact us today to discuss our no win no fee debt collection service or outsourced credit control solutions.
