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Blog

08 June 2018

Whether you’re starting a new business or have an established business, understanding your cash flow is one of the most important aspects of business management.  You can’t operate effectively (if at all) without any money. 

Having a cash flow forecast is a vital business tool that allows some visibility around what your cash requirements are likely to be.  We work with a number of our successful clients to help develop their profit and cash forecasting.

One of the critical components of your cash management is getting cash in.  So, what are some ways that you can get cash earlier? 

  1. Have clear terms of trade: It is important that you have terms of trade that are clear and are communicated to your clients.  Do not be afraid to discuss your payment terms with clients up front.  It can save awkward conversations later. 

  2. Bill in advance: Cash is king!!  You need to look to get paid as early as possible.  You should look to obtain deposits where you can.  In addition, where you can, bill as early as you can throughout the job.

  3. Clearly communicate your price at the beginning of the job: Take away ‘bill shock’ by agreeing what you will do and what the cost will be.  You will need to clearly define the scope of work (and what is excluded) to prevent scope creep.  If a client has agreed the cost up front it generally prevents bill queries and the client is more likely to pay quicker.

  4. Discount for payments made up front: Another way to incentivise early payment is to offer a discount where your client pays before you start the work or at some set point before the due date.

  5. Get tough: You are not a bank for your clients!!  You have business costs you need to meet like wages and rent, so you need to be paid.  If you have clients that continually delay payment you should assess whether you want them as your client.  You could consider stopping work until they meet the payment terms under your initial agreement.

  6. Provide multiple payment options: How can clients pay you?  Do you allow credit card payments?  Can you set up DD’s?  Can you get clients onto regular instalments via DD?  Make it easy as possible for clients to pay you.

We love working with our clients to help them better understand and improve their cash flow.  Get in touch and we can discuss how can help you help you prepare a profit and cash flow forecast and help to implement some strategies to help your cash flow.

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