5 Ways to Getting Paid Faster and Improving Cashflow
Many businesses are dealing with an overload of paperwork and tedious manual processes. With sales invoices often stored across multiple folders on a computer, piling up on a table, or lost somewhere in an email inbox, it can be challenging to keep track of which ones have been paid.
Comparing physical bank statements to your invoices to record what’s been paid and what hasn’t is an inefficient, tedious process that eats into time better spent elsewhere for your business.
Here are a few tips to improve your cash flow and get paid faster, avoiding tedious paperwork in the process.
1) Simplify your payment process
Making it easier for customers to pay your business will streamline the entire payment process and increase the likelihood of paying promptly.
Simplifying the process involves several possible action steps:
Send your invoices quickly
The sooner you send an invoice, the sooner you’re likely to get paid, especially when the value is fresh in your customers’ minds.
Don’t wait several days to send the invoice, as this significantly increases the likelihood of payment delays.
With cloud systems, you can send invoices on the spot from wherever you are through a mobile app, as well as payment reminders after a reasonable amount of time.
Set clear payment terms
Are your payment terms clear enough for customers?
Complex jargon in your payment terms can negatively affect your payments and cash flow, with customers unsure about the steps they need to take to make a payment. Keep it as simple as possible to direct customers to take action quickly for payments.
Don’t be afraid to offer early payment options in return for discounts as well.
Show appreciation to your customer
Maintaining a friendly relationship with your customer is crucial to getting paid on time.
Believe it or not, there is research to support that the simple act of saying thank you or saying “please” in your invoices increases the likelihood of your business being paid more promptly.
No matter who you are, it’s always nice to be appreciated. Take the time and make your customer’s day a bit more pleasant – and they just might make their payments a lot more quickly!
Offer alternative payment options
Giving your customers options for how they prefer to pay their invoices is a great way to cater to their preferences and increase the likelihood of getting paid quickly.
If a customer generally prefers paying by QR code or a payment gateway and is only presented with the option to pay through a bank transfer, it’s doubtful they will be prompt in payment. Keeping options open is generally the best way to go.
2) Improve visibility over your finances
Real-time visibility over your business’s financials is the first absolute essential to improving your cash flow.
With a way to comprehensively view your invoices, you’ll have a better ability to quickly chase unpaid invoices instead of manually verifying which invoices are overdue by cross-checking bank statements. You save time, and you receive payments faster.
On top of that, you’ll be eliminating the anxiety of not knowing how much money you’ll need by a specific date to pay your supplier invoices.
Let’s say you owe x amount to supplier Y, and you need to have it paid by the 20th of September. Knowing this amount allows you to plan and ensure that you have that amount ready by that date.
It also gives you a systematic view of pending payments from clients and customers, which you need to follow up on to increase the likelihood of being paid on time.
3) Create a budget
Creating a budget is essential to manage costs effectively. With digital solutions now available to manage budgets more efficiently, you can save time budgeting without manually entering spreadsheets. With a budget, you’ll see where costs are high and plan for any expenses that may throw you off guard.
4) Adopt digital solutions
Digital solutions are becoming increasingly prominent, with many businesses looking to manage cash flow. They offer endless benefits in terms of time saving, productivity, and streamlining customer payments.
There are various types of solutions available to help you in multiple business areas. These include solutions which provide:
i.Forecasting and predictions around cash flow for better budgeting and planning
ii.Invoice factoring where businesses receive borrowings from a third party based on unpaid invoices owed to the business
Adopting digital solutions even gives you an advantage when applying for loans since these solutions allow you to extract reports needed for your application easily.
5) Connect with a trusted advisor
Accountants or trusted advisors are there to support and offer guidance in running your business.
Research shows that 50% of SMEs fail within five years, and the overwhelming cause is poor cash flow. However, 85% of businesses that worked with an advisor on Xero survived for over five years.
The reason for that is that you have someone to help you handle accounting and bookkeeping, cash flow advisory and accounting software training and implementation, which can all take up a massive chunk of your finance department’s time.
Managing your cash flow and getting paid faster are essential elements to set your business on the right trajectory – and the steps you take don’t have to be complicated.
Getting a handle on your finances and leveraging digital solutions to simplify the process will put your business in a better position to succeed.
To learn more about how valuable digital solutions are in streamlining payment processes, check out this article on the benefits of reimbursement software.
Try Spenmo’s payment automation today!
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