With cashflow it’s always a case of fail to plan, plan to fail.
With summer upon us and Covid-19 restrictions allowing a little more freedom (holidays), now is the perfect time to make sure your finances are in order.
In uncertain times such as Covid-19 and Brexit, the need to manage and safeguard cashflow is more important than ever as it affects the economy as a whole, across all industries. Fortunately, there are measures business owners can take to avoid the squeeze.
Kat Herbert caught up with Colm Devine, Head of Business Development, to discuss the 5 tips he would give to a business to manage cashflow, just by looking at invoices.
Whilst this may seem obvious, it is amazing how many businesses focus on the next sales effort rather than billing for the previous. As cashflow distinguishes between invoices you’ve sent and invoices that have actually been paid – that outstanding invoice, whether £/$/€, means little if you don’t yet have the money in your bank account to cover your costs. Business is a gift until it’s been paid for!
Processing payments within large organisations can be a long, arduous process with several opportunities for bottlenecks to emerge. It is vital that suppliers do not give their customers any additional excuses for taking their time.
Too often, simple errors such as invoices being issued with incorrect or missing details can lead to weeks of delay. Implementing a simple internal checking procedure to be followed before any invoice is sent out will prevent further errors and see you get paid quicker.
It is hard to put enough emphasis and weighting on relationships. Put simply, businesses that go beyond simply being a name on a piece of paper can make all the difference when it comes to getting paid on time.
In most cases, late payment of suppliers by a large corporate is not a conscious decision on the customer’s part, rather it occurs as a result of the slow-moving bureaucracy and multi-layered natures of the organisation.
Getting front-of-mind with the relevant people will help ensure that when your invoice comes in, a greater effort will be made to get it paid.
It is important that you are prompt on your collections and take pro-active action where necessary. Often businesses shy away from chasing payment for fear of jeopardising their business. But this should not be the case. Companies will be glad for the reminder – just make sure not to do this in a hostile way. In all aspects of doing business, diplomacy and respect are required. These principles are crucial to uphold when chasing payments. Set up a continual collections process of reminding accounts receivable when and what they owe you. Invoices that you let slip through the cracks can add up.
The best time to solve a cash flow problem is before it happens. Whether your business is running smoothly or is in a stage of hyper growth, now is the time to look at finance options. Businesses should strengthen their cash reserves and set up credit facilities when times are good. The reality of accessing funding is that the less finance a business needs, the easier it will be for them to get.
Remember, it is not just banks who provide funding to SMEs. The ongoing retrenchment of the established funding providers has seen the emergence of a new wave of finance providers that are ready and able to support ambitious, growing SMEs.
While much has been made of the rise of alternative finance in the last few years, awareness amongst business owners of these new funding options remains low. Seeking out these new alternatives has helped thousands of businesses in the last few years access the capital they’ve needed to launch new products, hire new people, and expand into new markets.
Invoice financing has been around for a while, but this funding option is gaining ground during Covid-19 and Brexit disruptions, providing millions of SMEs access to cashflow to survive, revive and scale.
How it works is simple: Invoice Finance enables companies to access the money they need from unpaid invoices that are owed to them in a process that is transparent, reliable, straightforward, and quick.
This is achieved by allowing the invoice financing company to purchase for cash the invoices up front so there is no risk of late payments.
To learn more about how Accelerated Payments could help manage your business to manages its cashflow chat to a member of our team today.