Increasing Your Cash Flow
Rieva Lesonsky, CEO of GrowBiz Media, offers tips on improving your business's cash flow.
By Rieva Lesonsky
Now that there are signs the economy seems to be picking up, it’s a great time to get a handle on your receivables. Here are some tips to get your cash flow, well, flowing again.
Been ignoring your QuickBooks? Reconciling your accounts could uncover some unpaid invoices you overlooked. Keeping up with your entries regularly will give you a clear picture of what’s due … and what’s overdue.
Take a hard look at your invoices. Sometimes slow payments are caused by customers’ confusion over invoices. Make sure all information on your invoices is clear, such as who the invoice is from, the amount due, the terms, what the customer is being billed for and where to send payment. Also, include any purchase order numbers and your tax I.D. Read more about what your invoice should include.
Invoice immediately. Don’t delay invoicing customers. Send the invoice as soon as the job is complete or the product is shipped. Send the invoice by email for faster results or ask the customer which way they prefer to receive invoices. Some may prefer PayPal invoicing. If you bill only once a month, make sure that is acceptable to your customers.
Don’t wait to follow up. If your customers’ payments haven’t arrived when they are supposed to, it isn’t pushy to send a quick inquiring email or make a friendly call. If you do nothing, the customer might figure you don’t care and pay someone else who is demanding payment. (You know, the squeaky wheel….)
Be sympathetic, but firm. If your customer can’t pay on time for some reason (cash flow problems on their end), work with them to find a solution beneficial to both parties. Work out a payment schedule until the customer catches up. If it doesn’t look like you’ll ever get payment, make sure you keep a paper trail of all your invoices, contracts and attempts to obtain payment. Detailed documentation will help you in case you need to plead your case in court.
Do a reality check. Maybe your old accounting system just isn’t working for you anymore and it’s time to explore new options. Make an appointment with a SCORE mentor and get free advice specific to your business. Happy collecting!
Rieva Lesonsky is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Follow Rieva at Twitter.com/Rieva and visit her website at SmallBizDaily.com to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.