7 ways to manage your cash flow
Keeping your business afloat can come down to something as simple as effectively managing your cash flow. Without it, you can’t pay staff, your suppliers or even your rent, and soon your business is taking on water and, unless you take drastic action, it can sink without trace.
Here we look at 7 ways to manage your cash flow.
1. Clear payment terms; make sure it’s stated on your estimates/quotes, a clause in your contracts or in big letters on your invoice (or ideally all three!). If your customers aren’t clear about when your invoices have to be paid, you won’t know when payment is overdue and this makes planning your cash flow impossible.
This one might sound obvious but it’s surprising how many invoices we receive that don’t state either payment terms or a payment due date.
2. Invoice promptly; assuming you run 14 or 30 day payment terms, if you invoice at the end of the month, or even a couple of weeks after work was completed, you’re automatically building in a payment delay.
3. Don’t wait until month end; invoice on completion of work – or within a few days – to keep cash flowing into your business throughout the following month.
4. Early payment discounts; offer special discounts if you have clients who consistently pay you late to encourage early settlement.
You could charge interest on late payments instead but clients are more likely to embrace the ‘carrot’ than the ‘stick’.
5. Make payments easy; give your bank details and ask for online payment rather than cheques so funds clear more quickly, and it will cost you less in terms of time and bank charges.
6. Direct debits; for regular work, set up a direct debit scheme to reduce administration on both sides.
7. Retainers; could you offer retainer packages with regular upfront payments rather than invoicing on completion? This would help your customers’ cash flow too.
If you’re thinking about investing in your website or marketing communications, our Growth Driven Design approach will enable you to make the commitment with costs spread across a monthly retainer. In this way, regular ongoing updates – or even a major brand investment – can be spread across a number of ‘bite size chunks’.
To discuss how Growth Driven Design can help you do more without impacting your cash flow, drop us an email or give us a call on 01420 568127.