how to get paid faster & improve cashflow
DESCRIPTION
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
IF YOU HAVE DONE THE HARD WORK...
of making a sale
REMEMBER THE MANTRA...
Turnover Is Vanity
Profit Is Sanity
Cash Is Reality
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...
Get it right the first time
to avoid delays!
Here’s how...
HENCE...
BACS
CHAPS
STEP 1: Get Your Invoicing Process Sorted
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
STEP 2: Improve Collections
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
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
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