Even before the Corona virus 69% of small business owners faced cash flow issues. Negative cash flow can limit your ability to pay bills, limit growth opportunities and ultimately force a business to close. These following best practices will help business owners turn cash flow positive without taking on new debt!
- Email your invoices immediately and correctly – It may seem obvious to bill as soon services are delivered. Some companies only issue invoices once a month. The business owner needs to make sure that invoices are being sent to the correct address. Also ensure you have the correct information like purchase order numbers, project name, quantities, approvals and all other relevant information so that the customer will have no problem processing your invoice. Be sure your invoice includes terms, due dates and your ACH information to receive prompt payment.
- Clearly state late payment fees – Your business might be a manufacturer or a service company, but you’re not a bank! You’re already giving your customer 30-60 day payment terms. You did the work in a timely manner, now it’s your customer’s turn to pay in a timely manner. If your worried about your relationship with your customer, you can always waive the late fees after you’re paid.
- Use invoice factoring to get your money immediately – Business owners can get immediate cash by selling their invoices to a factoring company like Blue Ridge Factors. Within 24 hours Blue Ridge Factors will wire you your money so you can get back to running your business instead of chasing late payments.
- Lease your computers and equipment – Cash is king and leasing allows you to keep more of your cash. Leasing may be more expensive in the long run but being able to hold onto your cash and make small monthly payments is the smart way to stretch your dollars. Leasing can also improve your credit score and give you a tax write off at the end of the year.
- Get mobilization money – Large orders require more time and expense. Your customer knows this. By getting a portion of the contract up front you can gear up on your customers money! After completion of the project you can offer extended payment terms if necessary and take advantage of Blue Ridge Factors to keep your cash flow positive.
- Pay your employees bi-monthly – Most companies issue payroll every Friday or every other Friday. By switching to a program that issues payroll on the 15th and the last day of the month, you’ve reduced your payroll to 24 payments annually! This also improves your employees cash flow.
- Run credit reports on your customers – Before you start working for a new customer pay for a business credit report to discover how they pay their bills. This is a free service for clients of Blue Ridge Factors.
- Start paying bills Online – Some companies offer discounts for online payments. You can buy a little more time with online payments by waiting until the last day to make payments. By paying your bill with a business credit card you can extend your payment for up to another 30 days and earn miles.
Cashflow IS the lifeblood of every business.
By implementing these strategies business owners can turn slow cash flow into positive cash flow.
Blue Ridge Factors is a Virginia-based #AccountsReceivableFactoring company. We help businesses get the #workingcapital they need fast. Our Business Development Officers are ready to discuss your situation and needs today. Simply call us at 1-800-530-2621, Monday-Friday, 9AM-5PM EST. You can also visit us on the web 24/7 at www.blueridgefactors.com for more information about factoring, our programs and to apply.