4 Quick Ways To Improve Cashflow
With the financial buffer of the Furlough scheme no longer available, the focus shifts back to the importance of cash flow to ensure fluidity and business continuity in these ongoing uncertain times. Below are 4 quick and easy ways to help improve cashflow.
1) Credit Checking
Prevent future problems by credit checking at the enquiry stage to ensure you don’t offer credit to non-paying or slow-paying customers. Put these customers onto cash-only accounts where they are required to pay in advance before work starts or goods are dispatched.
Direct debits may reduce late payments but won’t help if the customer has no funds.
2) Terms & Conditions
Terms and conditions should be agreed early on and payment terms should be clear on all invoices.
To avoid late payments due to administrative delays and errors, ensure you include all necessary documentation, authorisation, and purchase order numbers.
Ask the customer’s accounts department to find out when they make their regular payment runs.
For larger orders, consider a courtesy call before payment is due to ensure the customer is satisfied and they have everything they need to make the payment so you can resolve any discrepancies early.
3) Immediate Invoicing & Automatic Reminders
Prompt invoicing is key.
If working at a client site, use mobile apps to raise invoices before leaving the premises or use a card reader to take immediate payment.
Use recurring invoices and other automation where possible.
Automate your payment chasing process to include early and frequent chasing. Set up the reminders to increase in severity as the debt becomes more overdue.
Reconcile the bank frequently so all payments are matched to invoices promptly and you don’t chase invoices that have already been paid.
If your reminders are ignored, legal action may be required. Before that, try a phone call to their accounts department and a letter.
For regular buyers, put the account on hold and cease providing goods or services until some or all of the debt is cleared. It is best to not make a sale rather than make a sale and not be paid, which incurs costs.
4) Track Your Performance
Track your performance by measuring the debtor days and percentage of accounts receivable that are overdue.
See what features your accounting software has available to further improve efficiency, such as a “Short-term cash flow” section or with customisable Reports.
Get in touch with us to see how we can help with your Cash Flow Forecasting as well as advice for making the most of your accounting software.
MATCH is working hard to keep on top of all the latest news and government support so, as always, feel free to get in touch if you have any queries and we’ll be happy to help.
MATCH Accounting Limited