Cash flow management within a business is a very critical issue because it might affect the growth of the business if not well attended. The main goal of the business owner in meeting financial obligation is to speed up inflows and ensure that there is a balance between money going out and money coming in. Money coming in is the payments you receive from your customers, also referred to as accounts receivable. As a business owner you should keep a close eye to accounts receivable in order to improve the cash flow. Collecting payments is not an easy task and you might find yourself with a cash flow crisis as a result of slow payments. However, they are several ways of speeding up payments.
One of the best ways to encourage customers to pay you in time is by making it easy for them to pay. You should also issue invoices early enough to ensure that they send you money in a timely manner. If you send your invoices in a timely manner, customers are more likely to send your money in time. You invoice should clearly indicate when the payment is due so that the customers could understand exactly when they are supposed to send their money. The customers should be provided with different fast and easy payments methods such as online and fax methods.
As a business owner you should always stay on top of the payments. You should always beware of when the customers are supposed to pay their bills. It is also advisable to keep historical record to track the habits of your customers over time. This record will assist to know which customers require to be prompted to pay. Offering discounts to the customers who pay early will also encourage them to deliver their payments in a timely manner.
Establishment of a credit policy is necessary within the business to ensure that the owners can make credit decisions about their customers faster and through this, they will get paid faster. Business owners should be in a position to foreknow customers’ credit needs even before they ask.
As the business owner you should establish a collection policy indicating when you commence efforts to collect on a payment. Your collection policy should also provide ways of handling customers who might take too long to pay such as involving an attorney or a collection agency. However, chronic late-payers and someone who has only delayed his/her payment once should be handled differently.