When you are busy growing your business it can be difficult to keep on top of everything. However, if you don’t keep on top of your cashflow, it will have a serious impact on your business – and in extreme cases can even cause it to fail. You know that you need to spend time to get your processes and procedures in place – but you are just too busy at the moment. So are there some quick and easy things you can do to improve your cash flow? Fortunately the answer is yes.
Here are some quick tips to help improve your cashflow:
1. Do your homework first.
Potentially the best way to improve your cashflow is to carefully review your customers before you provide credit terms. By requiring them to complete a credit application form you will have the necessary information to do an ASIC check on them. ASIC stands for ‘Australian Securities and Investments Commission’ (www.asic.gov.au) and is one of the easiest ways to verify information about your customers. Brodie Collection Services can provide ASIC searches from a low $46.30.
2. Make it easy for your debtors to pay.
Check the invoices you are sending out and make sure it has all the details a debtor needs to make payment. For example does it have the date by which the debt needs to be paid, as well as how it can be paid? A lot of businesses now prefer direct bank transfers to make payments so make sure you have your BSB and account details on your invoice.
3. Call your debtors rather than sending an email or letter.
It is estimated that if you call a debtor rather than sending an email or letter when you first chase up a debt, then there is a much greater chance of the debt being paid. It shows that you are actively chasing the debt, whilst at the same time keeping the process less formal. If there are any issues with the amount outstanding they can be sorted out quickly.
4. Don’t let debts get too old.
If you have been chasing a debtor and not getting anywhere – don’t defer the decision to engage a debt collector. Remember the older a debt is the less chance there is of receiving payment. If you engage a debt collector (like Brodie Collection Services) who only charges a commission when a debt is paid you really have nothing to lose in chasing a debt that you were unable to recover yourself.
5. Be prepared to negotiate
Sometimes customers have cashflow problems but will be too embarrassed to let you know. If you actively pursue them by calling them up and asking why the debt has not been paid then they will more likely let you know they are having cash flow problems. If this is the case then you can negotiate a payment plan with them. Remember it is always better to get paid – even if it is over a relatively long period of time – than not at all.
6. Revisit old debts.
Do you have old debts that you are no longer chasing? Then it is a good idea to do a quick review of these as debts – as any debts less than 6 years old can still be pursued. With debts this old, it is best to engage a debt collection agency who will most likely have a greater chance of recovering at least some of these debts.