How to speed up your cash collection.
When talking to small businesses to understand their pain points, the biggest issue they all struggle with is cash flow. Managing cash flow is the lifeblood of any small business, sometimes marking the difference between success and failure. Having ample cash on hand will ensure that suppliers, employees and others can be paid on time. The following tips have been complied by Bureaux Members, Finance Studio, and will help in speeding up your cash collection from customers.
1 – Make invoicing more efficient by using electronic invoices and send promptly.
2 – Use payment platforms such as PayFast (www.payfast.co.za) SnapScan (snapscan.co.za) or Zapper (zapper.com) to make payment easier for customers.
3 – Use a cloud based accounting software like Xero (www.xero.com) to send automatic reminders as invoices become due and regular reminders once overdue.
4 – For large projects bill a percentage upfront, again half way through the project and only the remaining balance at the end.
5 – For orders requiring a large initial cash out flow ask customers to pay a deposit.
6 – Define your payment terms and communicate these to your customers.
7 – For recurring customers set up direct debits with a platform like DirectDebit (www.directdebit.co.za) or Easy Debit (www.easydebit.co.za).
8 – Offer a small discount to customers who pay their bills early and charge a penalty to those who pay late.
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