As a small business owner, you know that cash is king. You also know that the amount of time it takes for you to collect on services rendered often gets in the way of your ability to keep cash flowing. Perhaps you’re struggling to grow your business for this very reason.
Many small business owners have focused on taking measurements of their cash flow situation to give them a better projection of where they might find difficulty. Some businesses only do this on a yearly basis while organizations that are truly struggling will take weekly measurements. It’s businesses like these that really need to consider an alternative to their current methods.
When looking at current accounts, you do your best to encourage your clients to pay as soon as they possibly can. To achieve this, you stay prompt on your billing, often getting invoices out within days of a transaction. Perhaps you’ve even demanded a certain percentage of the bill to be paid up front to keep your cash flow situation in a better place? But most of your clients will avoid paying for as long as possible so they can improve their cash situation.
Companies that demand full payment at the time of service have no problems with cash flow. However, they’re probably losing out on a very wide array of clients who can’t pay everything up front and rely on some type of credit or financing before they’ll do business. Keeping up on your current accounts and improving your receivables are vital processes for companies that extend credit.
What are some of the methods companies use to get their clients to pay faster? Start with offering discounts to clients that pay early. This develops an incentive for them to part ways with their cash on a timelier basis. Improving receivables also includes making sure your clients are credit worthy. In some cases, partnering with a third-party financing company can take the work out of the effort while flexible financing is offered to your clients. Keeping an eye on slow-paying customers also pays off in the end. If you know who has a history of slow payment, you can be more aggressive with them and keep payments current and your cash flowing.
Many companies have developed plans for surviving cash shortfalls. In this unfortunate situation, companies will plan for the day when they don’t have enough cash to make payroll if they pay all their utility bills or vice versa. Long before they find themselves in this situation they should have considered selling their receivables to a third party for quick cash.
Omega-RMS has solutions that get organizations strapped for cash out of the hole and on the way to growth. With the accounts receivables management solutions at Omega, clients sell off their receivables and gain a better cash position, instantly. It’s not only a method for increasing cash flow, it also takes away the burden of cashing down debt.