Cash flow management for small businesses means the difference between survival or failure. Here are more cash flow management tips that will lower your blood pressure and raise your cash levels at the same time!
Cash Flow Management Tip #1
Know what invoices are outstanding and when payment is due according to your receivables policy.
Most accounting software will keep track of the age of invoices with a click of a button. Ask your bookkeeper if you don’t know how to pull the report. Every week you should know which invoices the following week are due.
The report should show:
- All the invoices that haven’t been paid yet
- The due date for payment of each invoice or “days outstanding”
- The amount due on each invoice
- The client responsible for each invoice
Cash Flow Management Tip #2
Call the client before the invoice is due.
The most successful small business owners will call the accounts payable clerk at the customer five days before an invoice is due. It’s the opportunity to remind the client and to check to see if there will be any issues preventing payment.
We wrote an article on “Susie”, the accounts payable clerk and how she can really help your cash flow if you make her your ally. You can find it here.
If you call the client before payment is due, it’s a happy call. Don’t forget, the longer an invoice remains unpaid after the due date, the much higher the likelihood you’ll never collect.
Call Susie in advance and you’ll see your collections improve significantly.
It’s painless. It’s easy. It’s not intimidating. Once you’ve collected, you won’t need to borrow money from the bank. Yourbusiness will be generating its own cash flow.That’s a beautiful thing.
That’s why you’re in business. For more small business tips on cash flow management for small business click here.
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