Help cash flow using Great Communication
Cash is King!
(or at the very least accessible money in the bank is KING)
Cash flow is about money moving through your business. While more sales should generate more money, often a sales burst increases the debtors amounts owed rather than directly augmenting more money at your fingertips.
Businesses can get stuck in a rut, especially if you are comfortable with systems and processes you have used for years. But as times get tougher cash gets tighter;- just because your team is well-versed with a certain system, that doesn’t make it the most efficient solution!
This may come as a surprise, but it isn’t tricky maths or regular investor injections that underpin great cash flow. Communication is at the heart of it all; starting with clear sales techniques covering terms and conditions through to systematic debtors management – communication is critical.
3 Ways to Help Cash flow
A. Communicate Early with Potential Clients
Client-embedding communication gives your business more leverage to collect payments in full and on time, as you have removed any leeway for “misunderstanding” excuses.
- Right from the get-go explain your pricing and terms, don’t be shy take a little time to outline what you expect to deliver and when you expect to get paid – it isn’t really a sale if you don’t get paid. And remember that the cost of debt collection can easily eat up any profit margin. You COULD be worse off by pushing a potentially slow customer into signing up, you WILL be worse off if you make a sale to someone who takes your stuff and never pays you for it!
- Explain your debt collection process to the client when you issue the bill (or better still when you start work). Something along the lines of “here is our invoice, it is due on the 15th June, xyz will give you a courtesy call a few days before it is due to confirm everything is OK for on-time payment, can you give me the name of the person I need to speak to?”. This sentence is a great one because any lack of intention to pay on time usually shows then and there on the customer’s face, enabling you to stop-work and/or defer work to avoid any further issues.
- Understand your client’s business processes too, not just for the sale, but know who pays the bills and if they have any special needs or quirks. Also ensure the “cheque-writer” receives a copy of your invoice and understands your terms and conditions – a quick phone call just will save weeks of run-around once the invoice is overdue.
Having a slightly uncomfortable conversation about money and payment upfront is much much easier (and gets even easier with practice) than having a really difficult conversation about an overdue debt!