In part one of how to improve your cash flow with receivables, you were introduced to how your payment collection methods and policies can make a big difference in your overall cash flow. Here are more ways to improve cash flow with your receivables.
Make Regular and Quick Deposits
At the minimum, you should make a bank deposit every day of your daily sales, which includes all cash and coin, checks, money orders, and travelers’ checks. If you have a spry business that receives a lot of cash and checks, you might consider making two deposits – one at mid-day and another after business hours.
Try to make a deposit before the bank closes at the end of the day, even if that means tallying your tills before your business day ends. You can always deposit your evening sales tomorrow, but getting checks in before the end of the day improves your check float time, especially on Fridays.
Scrutinize Before Giving Credit
Granting credit to customers means allowing them to pay for goods or services at a later date after they have been delivered or rendered. If a customer or client wishes to be invoiced, choose to grant credit carefully. Require that a customer completes a credit application. Check the business or individual’s credit report, and ask for other credit references from other businesses.
If you do choose to invoice, be sure to do it immediately at the time of delivery. Don’t wait to send an invoice by mail. Deliver it with the goods or services, or email it if necessary.
Always check your customer invoices carefully so that there are no mistakes. Check off every item with the customer at the time of delivery to ensure that every item is accounted for.
Call on Unpaid Invoices
You can choose your invoice terms. Generally invoices are due within 30 days of receipt.
After your deadline, start calling immediately. Ask why the payment hasn’t been received, and work with the customer to get payment in immediately. If a customer has been dependable, it’s acceptable to allow for a few late payments. However, if a customer consistently pays late, close the credit and start demanding payment upfront.
Send to Collection Agency
As the last resort, you may have to transfer an uncollected account to a collection agency if your own efforts have failed. Choose an agency wisely, and once you’ve made your choice, send unpaid accounts immediately after your chosen period such as 90 days or 120 days.
Cash flow is the lifeline of your business, and with these strategies, you can ensure your lifeline continues to pump healthily.