Keeping your small business’s cash flow healthy is essential if you want to grow. Cash is the lifeblood of any business, but as the old adage goes, there’s no grow without cash but no cash without growth. So, what questions do you need to start asking in order to make sure your business has the best shot of growing in the current tough economic climate?
1) Do we have the right procedures in place to chase invoices?
Getting your invoicing procedure sorted will mean it’s easier to get hold of money from customers. It’s all about having an efficient process. As a general rule of thumb, it’s advisable to email and post an invoice and then follow up with a call.
2) Have you been building up good relationships with customers’ finance departments?
Doing this will give you an inside track when chasing payments. You will also be able to build up a better picture of their operating procedures and you could land some important nuggets of information. You’ll soon see which customers pay on time and which might need a bit of extra chasing.
3) Have you got recent cash flow projections?
If you’re relying on out of date projections, it might be time to update. Re-visit projections with a ‘worst case scenario’ in mind so you can map out the impact of potential late payments.
4) Do you credit check potential customers?
SMEs should credit check potential customers in advance to be aware of any issues that might crop up.
If your business is struggling to answer some or all of these questions, it could be worth looking into invoice finance. Factoring lets your business outsource credit collection which can take away some of the strains of invoicing procedures. You will also have nearly-instant access to the majority of the funds so that you can benefit from improved cash flow and liquidity. Now’s the time to start asking the difficult questions – if you need help, invoice factoring is definitely worth a look.