KA-CHING! Crude as it may be, the sound of a cash register ringing merrily is music to the ears of any business.
A recent survey in the United States found that forgetfulness and lack of funds were the principal reasons why people were tardy in paying bills. Half of those surveyed were late paying a utility bill while more than 40 per cent paid a phone bill late.
When running a small business, the lines get blurred while honouring personal and business bills with one feeding the other.
Those who have not got their financial ducks in a row drag their feet when it comes to paying what they owe, and that can bring another business down along with their own.
The act of balancing the ledger needs to be finetuned in order to keep that flow of cash streaming in regularly.
Here are some tips on getting your cash flow smooth and steady:
Invoice on time
You could set the tone of the payment by invoicing your customers on time and correctly. This shows you are punctual and professional in running your business.
Managing a small business could mean wearing many hats, but that does not mean sloppiness should be part of your style.
It may be tedious having to invoice, but doing it on time and correctly translates to getting paid in full and promptly.
In some cases, it would be better to take payment in advance depending on the service you provide.
Keep communication lines open
Communication is the key in getting goods, services and payment. One way to reach your target market and listen to feedback is through a dedicated email address.
That same mode of communication could be used to send invoices and follow-up on overdue payment.
Another could be using toll free phone numbers through which customers can call free of charge from landlines. Toll free numbers such as 1300, 1800 and customised smart numbers can connect with any landline or mobile. And they make your business look more professional.
Customers can call you at no cost and your custom number can be a central point of contact.
Make the terms and conditions clear
Set the policy agenda from the start.
Before the trade is made disclose what your trading terms are with the prospective customer and make sure they understand them.
State upfront if there would be consequences if payment is not made on time and what those consequences would be if payment is not made within a specified grace period.
Be firm about enforcing your terms.
Look into new technologies
Streamlining the process could make for efficient and beneficial business.
Like technology that triggers an alert when a customer fails to pay. It could mean an email reminder or a follow-up phone call.
An automated system for invoices that go out regularly can save a lot of company time and energy.
Simplify the payment process
Make your payment process simple and offer more than one payment option such as cash, cheque, online payment, credit card, to name a few.
Where possible, you can also offer EFTPOS at point of sale.
Keep a tab on transactions
An organised filing system is the bedrock of your cash flow. It could be used to get invoices out to customers on time, to alert you when a payment has been made and when it has not.
Balancing the books is one of the hardest, nerviest, yet most fulfilling parts of the business. But keeping an auditable trail of all your business transactions is vital.
Making clients pay in full puts your figures in the black. You can then pay your employees and buy stock. Your creditors can beat a retreat from your door.
And the cash flow cycle comes full circle.
The article has been submitted by Simone Cormack, a marketing manager employed by eFax - the world's largest internet fax service. Apart from overseeing marketing plans and blogging, Simone finds pleasure in taking long walks along beaches and spending time with her two young children.