Cash flow is the fuel driving your business. Here are a few ideas on how to ensure you’re steering it in the right direction.
No. 1: Take the wheel with tech (it’s time)
Modern technology has made giving your accounting team a tech boost easier than ever. Looking for better insight into your process or a place to store all your data? A cloud computing system, like QuickBooks, gives real-time metrics and prevents data loss with anytime-anywhere access. Need to get a hold of expenses? Certify offers detailed reporting, enforces your spending policy, and avoids overpayment. And if you are tired of wasting time and energy over invoices, check out the Crowdz InvoiceXchange. The mobile-friendly app streamlines the entire invoicing process and eliminates human errors with a host of automated features.
No. 2: Get paid faster by doing less
What do we mean exactly? Prompt and persistent online invoicing. While you consider the virtues of going digital, let’s talk automation. It’s a game-changer. Taking advantage of features like triggered updates (for you) and reminders (for clients), scheduled invoicing, direct payment, invoice templates, and numbering systems can reduce the amount of time between sending an invoice and getting paid. And the sooner you hear cha-ching, the better off your business will be.
No. 3: Make short payment terms your MO
Blame it on next-day delivery becoming the norm, but we want (ahem, expect) online deliveries to arrive ASAP—our invoices included. So how do you make this happen? Cut those payment terms down, e.g., set them at net 14 if you want to see money in the bank within the next four weeks. That said, familiarize yourself with what terms are realistic within your industry before settling on a time frame.
No. 4: Sell those unpaid invoices for cash
Whether it’s seasonal demands, growth, or payroll, the solution to a cash crunch is a whole lot faster and easier than you think. Consider accounts receivable financing (also dubbed invoice lending) before your business hits a roadblock. In a nutshell, this strategy allows you to receive a cash advance on your receivables—stat. Not only does this translate to priceless flexibility in a pinch, but accessing money when you need it allows you to keep your cash flow predictable, meet credit obligations, and invest in growth.
No. 5: Put the breaks on late payments
You hear it all the time: outstanding invoices that get paid weeks, even months past their due date. Not only does this type of situation create a financial burden, but the process of chasing down a payment can cost you time and energy. We know what you’re thinking: Wait, can’t I simply sell my invoices to optimize cash flow? Yes, invoice financing is an option, but as a best practice, we like to set the expectation with clients that paying late means paying more. So include a penalty fee in your terms for when invoices go in the red—and stick to it.
Bonus: Plan for the road ahead with projections
If you’re going to make it rain money or hit a financial pothole, it’s best to know in advance. We suggest making a game plan by forecasting your anticipated payments and receivables. Having a clear picture of the steps you need to take and the numbers you need to hit gives your company a valuable upper hand. Consider it your GPS tool for avoiding funding issues, mapping out long-term strategies, and making real growth happen.
To discover more ways to maximize your cash flow, visit our features page here.