how to get paid faster & improve cashflow

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HOW TO GET PAID FASTER

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Post on 21-Dec-2014

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The changing landscape of business, pressures on cash flow, budgetary cuts and evolving legislation force companies to critically assess how to fulfil their business objectives without compromising their bottom line. The key to staying afloat in this climate is to closely monitor and improve cashflow especially in the SME sector as small businesses are more vulnerable to changes in economic activity and tend to battle more with cashflow problems in many cases. To speed up cash collection, especially after providing a service, here are quick practical tips that will help in improving cashflow.

TRANSCRIPT

HOW TO GET PAID FASTER

YOU SHOULD...

have the cash sitting in your own account

The refreshingly different approach to selling your businessSTUDIES ON CASH PAYMENT...

found that 85% of the reasons

for non-payment of

an invoice by a business is due

to invoice queries

or poor

administration

when someone chases an unpaid invoice, often a considerable time after the service or goods have

been delivered.

The refreshingly different approach to selling your business

ERRORS ARE ONLY FOUND OUT...

TOP 5 TIPS TO GET INVOICING RIGHT

1. Maintain a consistent, error-free invoicing format to avoid confusion

2. Use specific time frames e.g. ‘Pay within 14 days’ not ‘upon receipt’

3. Encourage electronic payment which is quicker with lower bank charges

4. Use client information e.g. purchase order numbers to speed up client processing

5. Email invoices with read receipts to avoid the ‘lost in the post’ excuse

SPOT THE PROBLEMSIT Services LimitedIT HouseDell Street

Luton SALES INVOICELU1 1AB

Invoice No: 2007/001Invoice to: University Limited Order Date: Park StreetLutonLU1 1TX VAT No:

Attn of : Fred Customer ref Fred

Company phone: 0870 121 1212 Account No Uni5190Company Fax: 0870 121 1213

Description Qty Unit Price Net Cost

IT support 2 350.00 525.00

Net Value 525.00

VAT 91.88

TOTAL 616.88

Payment terms 30 days NET from goods received

Order number:

RESOLVE THE INVOICING ISSUESIT Services LimitedIT HouseDell Street

Luton SALES INVOICELU1 1AB

Invoice No: 2007/001Invoice to: University Limited Order Date: Park StreetLutonLU1 1TX VAT No:

Attn of : Fred Customer ref Fred

Company phone: 0870 121 1212 Account No Uni5190Company Fax: 0870 121 1213

Description Qty Unit Price Net Cost

IT support 2 350.00 525.00

Net Value 525.00

VAT 91.88

TOTAL 616.88

Payment terms 30 days NET from goods received

Order number:

No order details

No VAT number, invalid invoice

Excel Rounding.Apparent calc

errorNo bank details, excuse to delay

payment

TOP 5 TIPS TO IMPROVE COLLECTIONS

1. Credit check new clients. Give slow pay/ no pay customers a wide berth.

2. Invoice promptly when service is delivered, not at month end or when you have time.

3. Split disputed invoice to get payment for undisputed portion while resolving dispute.

4. Offer to smooth annual bills and spread monthly via standing order.

5. Be persistent in chasing debts and keep abreast of developments in client’s company

STEP 3: Use Situation Enhancers

TOP 5 SITUATION ENHANCERS TO IMPROVE CREDIT CONTROL

1. Get full name identity. Find out the details of the person in charge of the accounts payable department. Keep notes. During conversations, remain polite yet assertive. This helps in controlling the outcome of the situation.

2. Payment methods are evolving. Consider using PayPal or credit card.

3. Adopt a credit control ethos – appoint a ‘champion’

4. Consider bartering where options would benefit your business

5. Understand your client’s payment process and payment cycle

YOU GET PAID FASTER WHEN:

Your invoices are straightforward and devoid of error

Your invoices are straightforward and devoid of error

Customers know you will chase

Customers know you will chase

Split large invoices and stage bill

Split large invoices and stage bill

You follow-up progressively with clients and make credit control routine

You follow-up progressively with clients and make credit control routine

You make it easy for customers to pay with alternative payment options and clear deadlines

You make it easy for customers to pay with alternative payment options and clear deadlines

NEED TO TALK TO SOMEONE?

If you need to talk to a Finance Director or finance specialist

about cashflow, credit control, business strategy or

any other financial management issue, arrange a

FREE NO-OBLIGATION consultation with us.

Email: [email protected] or [email protected]

Phone: 01 582 516300/ 0845 129 9900

Visit us at: www.efm-network.com

CONTACT US NOW