When it comes time to launch a new business, you have to plan all sorts of underlying frameworks to ensure you're able to consistently keep your operations humming along. For example, you need a process for making your product that is reliable and repeatable. You also need procedures for spreading the word marketing-wise and delivering sales pitches to potential customers. If you don't figure all of these things out, your profitability is sure to suffer.
Have you figured out exactly how you're going to collect money from customers once you've made sales?
There's another area where careful planning is key, and that's cash flow. Have you figured out exactly how you're going to collect money from customers once you've made sales? Simply sending an invoice and hoping they pay might not be enough. The payment process is often prone to breakdowns, and you have to be highly organised and prepared to work through them.
The following is a guide to preparing your business for smooth payment processing.
Getting customer accounts set up
If you want to ensure smooth cash flow into your company's accounts, you need to begin that process immediately upon making your first sale. The moment a customer agrees to purchase your product, you should set the gears in motion. Set up an account for the buyer in question and get all the logistics squared away.
According to the Victoria State Government, it's wise to give each customer an ID number and then attach as much specific information as possible to that ID - client contact names, emails, phone numbers and the specifics of how they like to make payments. Organising all this information will make it far easier to follow up with people later.
Once you have all the necessary account info on file for your customers, you can start to define the exact terms of their payments. Decide on the ground rules for collecting payments from clients - businesses typically give a grace period of 15 or 30 days - and use that as a backbone for your overall bookkeeping process.
Defining payment terms clearly
Clear payment terms are the lifeblood of any organisation. If you make it simple and straightforward for customers to know your expectations payment-wise, everyone's life should be easier. People will know when to deliver your cash, and you'll be able to plan ahead, preparing to reallocate that money for improving various aspects of your business.
That's why it's so important to let customers know immediately what you expect from them. This doesn't just apply to timing - you also want to specify what forms of payments you accept, such as cash, checks, credit cards and so on. The Department of Industry, Innovation and Science correctly notes that if your company fails to establish these terms quickly, you risk running up a pile of unpaid invoices and jeopardising the fiscal sustainability of your company.
Debt collection might seem like a hassle, but in the long run it's a legitimate strategy for reducing risk at your business. The goal here is not just to maximise profits, but to collect the money you're owed quickly so you can keep growing your business without skipping a beat. Why settle for any sort of delay in that process?
Lining up a backup cash flow plan
When it comes to ensuring smooth cash flow, you can never be too safe. You might think you can trust your customers to pay up on time, but it's hard to be 100 per cent sure, which is why it's smart to have a backup plan ready. One such plan is to have invoice finance just a phone call away.
With invoice finance, you'll never have to worry about waiting weeks or months for customers to deliver the money they owe. You can collect a big chunk of the cash you need within 24 hours of picking up the phone. Talk to us today about how this access to working capital can help lead you to business success.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].