Poor Cashflow is one of the biggest challenges facing business owners right now.
Irrespective of their business terms, many business owners are struggling to collect monies owed to them. In some case, people are owed money for years and not just months. It is not uncommon for people to be waiting over 90 days on average for payment.
Is this your fault or the fault of your client? What can you do about it?
Here are some ideas…
1. Decide today what your terms of trade are. Cash with Order, Cash on Delivery, 30 Days, 60 days etc. Be very clear on what impact NOT sticking to this will have on your business. Just add up all the interest on your overdraft last year and consider what type of holiday you could have had with that money in your account.
2. Explain the terms to your team and stress that from now on, these are the rules. Make sure you learn the rules as well.
3. Start to explain your new terms to your customers/clients and make sure that you ask for your money before it is due. If you leave it until after the due date, its already late and the customer does not think you care about your money.
4. Always bear in mind that its your money you are collecting because you have delivered the product or service.
5. Understand that time spent chasing money is costing you money so make sure it is effective, consistent. The motto “firm, Fair, Friendly” is a good approach to collecting money.
6. Understand that the longer you leave your money out there, the less chance you ever have of collecting.
While I accept that in some business, credit terms are give and expected, this need not apply to all businesses. Does it need to apply to yours?
If your business needs some focus on cashflow, call Derek 0n 087 222 0720 today. We also offer a service for chasing monies owed.