It seems so simple, collect your receivables as fast as possible and slow down your payables without jeopardizing the relationships you have with your customers and suppliers. However, if you are struggling with this seemingly simple equation, you are not alone. For many businesses, squeezing as much cash flow out of their existing operations is a real challenge.
If you’re looking to boost your cash flow, consider the following:
- IF YOU DON’T GET PAID, A SALE IS NOT A SALE – If you are viewing credit management as an obstacle to sales, change your thinking and be sure to get your sales team to change theirs too. Consider withholding commission payable until your customer has paid you to cement this thinking.
- THINK LIKE A BANK – If you extend credit to your customer, you are not just their supplier, you are their banker. As such, it’s a good practice to keep track of your customer’s payment habits. And be sure to also assess the risk and the return of each one of your customers on an ongoing basis.
- NEVER STOP COMMUNICATING – Not only does chasing down payments damage your profitability and your cash flow, the longer an invoice remains unpaid, the less likely you are to get paid. Stay in constant communication with your customer to head issues off at the pass before it’s too late.
- CREATE A CLEAR POLICY – Take time to create a policy for collections and invoicing and stick to it. Don’t make empty threats; follow through. Be sure to send your customers friendly (or not so friendly) reminders on schedule and keep a record of all conversations.
- FIND A SOFTWARE TOOL THAT WORKS FOR YOU – If you sell on credit, your most important source of cash flow are your accounts receivable. Yet, generating an accurate cash flow forecast is time consuming, but by using a software tool that works for you, you will save money in the long run.
Please visit Dynamic Legal Recovery’s website or call us at 877-777-7564 for your complimentary evaluation.