For SME business owners, one of the most important aspects of cash flow management is making sure that stay on top of debtors..
1. Refine your invoicing
Make sure your invoices are clear, consistent, and concise, including all relevant information (e.g. purchase order number, payment terms, international payment details, and so on). This will help avoid any confusion and prevent any unnecessary delays, while even the smallest detail is clarified.
2. Automate your invoicing system
Sending invoices electronically not only increases the chances of getting paid faster but they can also easily be accessed and processed by your debtor. Plus, you’ll have a record of when the invoice was sent and received, which can be helpful if there are any disputes down the line. Just as importantly, it means you can schedule invoices, reminders, and alerts in your system, to avoid things slipping through the net.
3. Use payment terms wisely
Depending on your cash flow status and individual debtors, you can offer an incentive for early or prompt payment. Alternatively, you can agree on full or partial payment in advance. You can flex your payment terms creatively to reflect business needs.
4. Remain vigilant
If your invoicing system includes promptly following up and tracking payment milestones, then you need to be diligent in monitoring this process and acting upon warning signs. Maintaining a line of communication and addressing issues directly and openly is critical to your business. Complacency or burying your head in the sand are not options…