One of the key goals of any developing small business is to build strong relationships with return customers. Once you have a good rapport going with your client base, you can start to rely on them to make multiple purchases and help sustain your business over the long haul.
There are a lot of moving pieces in business, and sometimes, they move more slowly than you'd like.
Unfortunately, however, relationship-building and deal-making comprise only half the battle. The other half is actually collecting the money your customers pledge to you - a process that many take for granted, but sadly, it's not automatic. There are a lot of moving pieces in business, and sometimes, they move more slowly than you'd like.
If a client is hesitating to pay you the money they owe, it can have a very disruptive impact on your business. Without the capital you need to turn around and cover your company's expenses, it can be difficult to keep your company afloat. This is a problem you need to address quickly if it comes up.
How can you address cash flow shortages?
Consider your options for addressing the problem the minute you find that something is amiss with your cash flow. According to the Queensland Government's business and industry portal, there are two main ways to hand it - deal with the cash shortage, or reduce your need for cash in the first place.
As for the former, there are a couple of ways to get your cash flow moving again. One is to get more demanding with clients, continually telling them they have to pay what they owe in a more timely, reliable fashion. Another is to increase your prices so that each sale results in a greater profit. This way, you don't have to collect as many payments.
On the other hand, you could just cut costs so you're less reliant on cash. For example, rather than purchasing new properties or materials, you could lease them so you owe less money up front. This reduces the immediate impact on your cash holdings. Alternatively, you could put off projects like expanding your staff or offering raises to your employees.
Get the money you need, faster
Of course, there's only so much you can do to limit your company's reliance on working capital. Everyone needs cash to stay in business. That's just a fact.
If you have customers pledging to make payments but putting it off, one possible course of action is to adjust the timing of your debt collection process and give clients a narrower window to follow through. If some customers are trying to get away with waiting 60 or 90 days before a payment, consider tightening that up and insisting on 30 days or even 15.
According to research from Dun and Bradstreet, 90 per cent of the small businesses that close each year are doing so because of problems they've had with cash flow. You don't want your company to be one of them, so finding a more aggressive approach to billing might be necessary.
Invoice finance can keep you afloat
If you've still got unpaid invoices lingering on your ledger and you need cash quick, one possible course of action is to get help in the form of invoice finance. With invoice finance, you don't have to worry about waiting weeks or months for people to pay you what they owe - instead, you can get the cash you need within hours.
Sitting around waiting for payments simply equates to killing time, and time is money in business. If you get paid faster, you can then turn around and invest that money in the future of your organisation. With invoice finance guiding the way, you can advance your enterprise to the next level.
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].