Earn it & make life sweeter…

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Earn it & make life sweeter…

It’s amazing to think that in today’s market place with so much of our lives dictated by digital online payments, that cash flow would be a problem to any business.

But sadly it still is and there are several reasons why businesses struggle, but let’s focus on an age old one… and find some clear solutions to keep you on track!

Get invoices out promptly

If you invoice your clients monthly and your terms are 30 days, that’s what you will wait – at least! So speed up cash flow by sending out invoices as soon as you ship products or complete a job. Yes there is more admin, but cash flow is the lifeblood of your business.

Raise your prices & review

From personal experience, I’m used to working within budgets. Clients always want to pay less than I suggest and so I gently explain that you really do get what you pay for. Something will always have to give in order to get the lowest price, be it quality, service or time – all of which cost money – or most importantly, your unique knowledge as that is what you do best!

Of course, it’s not what you wanted to do, but in such circumstances you would rather be around to offer a service or product, than not be around at all…

I’ve done business for years with tried and trusted suppliers (and not necessarily the cheapest) but when things go wrong I am reassure to have the expertise and I need, which is invaluable!

Here’s a quote I love, which says it all:

“If you think using a professional is expensive, wait until you use an amateur!”

Work under retainer

One way to even out the irregularities in cash flow is to seek clients who will put you on a retainer, paying you a guaranteed amount of money each month. Retainers are usually set up to guarantee that you will set aside a specific number of hours to do work for a client each month. The client pays that amount whether they use up all the time or not. If they go over the time or require additional services then they pay an additional hourly fee. If they don’t use up all the time, they lose it. The unused time does not accumulate from month-to-month.

Upsell and cross-sell

Upselling refers to situations where your customer buys a product or service, and you encourage them to spend more for additional features or packages. They are effectively upping the amount they are spending, albeit for more or better services or products. Its perfectly ethical, just look at amazon! I’m really appreciative for their suggestions when I’ve just made a purchase and they suggest I might like something similar. The customer always reserves the right to say no!

Cross Selling refers to situations whereby a customer buys a product or service and is simultaneously sold related items that often complement their purchase.

For example, you are an existing client with Marden & Co and want a mortgage. Whilst speaking with us, we would let you know that we can help as we now have a trusted mortgage broker as part of professional associate team, so instead of just getting your accounts ready we offer two services under one call.

Ideally I would like a link to a new page here, but don’t think it will be ready and will refer back to it when it is… our mortgage broker

People, once they’ve decided to buy, are naturally swayed by more and better options, additional value, and the excitement following their initial purchase. Many customers don’t know about additional items or options or how well they complement the initial item or service they bought. Upselling enhances their initial purchase, making them more powerful, capable and effective.  Similarly, cross-selling enhances their purchase, often maximizing its impact on their business.

Accept credit cards to speed up cash flow

You don’t have to be a retail store to accept credit cards from your customers. A wide variety of businesses can benefit from this facility & instead of waiting 30 days or more to collect payment you can get paid in 2 or 3 days by asking them to pay you with a credit card instead of having you bill them. You’ll have to pay a percentage of each sale to the credit card company, and possibly a monthly fee, but those expenses may be negligible when you consider the time and money you’ll save by not having to send out monthly statements. This is a win-win arrangement. The customer can still string out payments, but you’re not on the end of the string! An added bonus: speeding up cash flow can help you speed up payments to your creditors, which may lower or eliminate interest payments that you make to the bank.

Accept electronic payments

Don’t limit the forms of payment you accept to the traditional ones. There are numerous forms of electronic payment systems that businesses and individuals use today and which you should accept. These include ACH payments (for business accounts), PayPal, and mobile payments.

Shift your receivables to a finance company

If your customers don’t like to pay bills for your type of product or service with a credit card, or if the amount is too large for them to feel comfortable charging, look for finance companies that will offer loans to your customers. Again you get paid now, the customer gets to string out payments, and you don’t have to go to the trouble of sending out monthly statements.

Get some or all of your money up front

This is especially suited to the building industry, so don’t spend weeks or months working without pay. When you negotiate deals, plan to get at least a third of the money up front if you are working on a long-term project. If possible, spread the remaining payments so you cover all your ongoing expenses across the duration of the project.

If you don’t know your customer and it would be difficult to collect if they didn’t pay or if they never came to pick up work they ordered, insist on payment in advance. That way you don’t have a collection problem.

Check credit ratings before the sale

One of the best ways to avoid collection problems after a sale is to make sure the customer is credit worthy before the sale. Take the time and  spend the money to do credit checks on new customers. If the credit check makes the customer look risky, ask to be paid upfront in cash.

Listen to the buzz within your industry too! If you are unsure of the credit-worthiness of a business, try to find others who have sold to the same businesses. Ask is they have had any trouble collecting, and if they have, don’t make the sale.

Catch credit problems early

Keep an eye on unpaid accounts from existing customers. Don’t wait until they are 6 months behind in payment to try to collect. Send out late notices if you haven’t received payment by the next billing cycle. If a company who has normally paid on time still doesn’t pay, call to find out if there is any problem with their order or with the service you are providing. If they say no, ask when you can expect payment. Fair is fair.