As a small business owner who may extend credit to your customers, you may find that it is sometimes difficult to collect payment. This is a serious situation as it affects your cash flow and therefore negatively affects your ability to cover daily expenses and obligations as they arise. It is therefore important for you to implement systems that will ensure that customers pay on time and that sufficient cash is constantly available for you to run the business efficiently. One of the best ways to get started with managing your cash flow is working with a qualified bookkeeper who will help you focus on what is important. Here are few steps that you can take to encourage your customers to settle on time and to generate better cash flow in your business.
1. Know Your Expenses & Outstanding Income – You should be fully aware of all the expenses that you need to cover in the running of your business and when they are due for payment. This means knowing when all your bills are due, when suppliers are due for payment, when employees should be paid, when customers should make payments, and the amounts that are due for each expense. A bookkeeper will be able to help you to keep track of all your expenses and income so that your cash flow can remain positive at all times. Your bookkeeper will help you to set supplier and creditor payment terms that work in your favour.
2. Bundle Products and Services – Sell complimentary products as a package in order to encourage sales. For example, a restaurant could offer combo packages that cost less than the individual menu items if bought separately.
3. Encourage Repeat Business – You can do this by offering discounts to repeat customers or rewarding customers for sending you referrals. Most importantly, offer excellent customer service and customers will naturally come back. Be creative.
4. Cross-Selling – If you offer several different products or services, find creative ways to introduce unknown products to customers. For eg. introduce customers to new menu items or complimentary side dishes as they place their orders.
5. Offer backend support – Go above and beyond to please your customers by
offering backend services such as free delivery or free shipping.
By working closely with a qualified bookkeeper and by being creative, you can improve your monthly cash flow situation.