SME growth: Poor Cash Collection Hinders SME growth
Poor cash collection can constrain your business growth. Developing strategies to get paid faster is one of the most effective ways to increase cash in your business. Here are five things I recommend:
1. Introduce new revenue lines: Do you have a strategy for that new product or service? Have you thought of how to bring in new cash with no payment terms (the best cash flow structure)? Or better yet, payment in advance? Creating a mix of revenue lines reduces risk in your business.
2. Change your contract terms: How often do you just start working without a signed contract? You can be fighting with one hand tied behind your back when it comes to collecting overdue payments.
3. Enforce credit terms: Often we let good customers delay their payments when we want their business. Make your customers prioritise paying you. Don’t be afraid to use collection steps to get prompt payments
4. Review your aged debtors listing weekly: You can’t know whether you are beating the benchmark if your data is wrong
5. Nail your invoicing approval process: Ensure your invoices are correct to avoid missing your customers’ payment cycle Businesses that monitor and partner with advisors to improve their financial performance will be well-positioned to make the most of new information.
