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Cashflow is, without a doubt, the number one issue faced by small business owners. Almost every survey, poll or report highlights this. Even without the data, most business owners know this from experience.
We work with small businesses across a wide range of industries and sectors. Over time, we’ve learned what really works when it comes to cashflow management. Below are five simple and effective ways to improve your cashflow.
1. Reduce Payment Terms
While 30-day payment terms are often seen as the norm, there is no rule that says this must be the case.
If you’re a B2B business issuing invoices monthly, you can decide when your invoices are due. This may vary by client, or you may choose a standard approach across your business.
If you want invoices paid within 14 days instead of 30, that is entirely your decision.
Shorter payment terms mean payments are received more regularly throughout the month. They also change how late an invoice feels to the customer. Even if payment is delayed, you’re far more likely to receive it within 30 days rather than waiting even longer.
2. Invoice at Different Times of the Month
Creating invoices at the same time each month might be easier for your diary, but it’s not ideal for cashflow.
Issuing invoices weekly, with varied payment terms agreed with your customers, helps ensure payments are flowing into the business consistently. It also makes credit control easier and keeps late payers visible.
For example, if you issue invoices every Friday with 30-day terms, after the first month you’ll begin receiving fresh income every week rather than all at once.
3. Speak to Account Payers Regularly
Strong working relationships are key to improving your cashflow.
Speaking with your clients regularly helps you understand what’s happening in their business and identify any potential issues before they affect payment.
A simple follow-up after sending an invoice to confirm it’s been received and there are no queries can significantly reduce delays. It also builds trust and shows you’re open, flexible and easy to work with.
When clients feel supported, they’re more likely to pay on time.
4. Get Someone Else to Handle Credit Control
Using an independent person to manage your credit control can be extremely effective.
This allows you to maintain positive relationships with your clients while someone else handles the awkward conversations. Clients can direct frustrations away from you, and the credit controller is simply seen as doing their job.
It’s the classic “good cop, bad cop” approach and it works.
5. Invoice on Time
This one sounds obvious, but it’s often overlooked.
When you’re busy running a business, invoicing can easily slip down the priority list. However, late invoices lead directly to late payments.
Block out regular time in your calendar each week or month for invoicing. Above all else, once the work is done, get the invoice sent promptly.
Need Help Improving Your Cashflow?
We have extensive experience in cashflow improvement and credit control. If you’d like to talk through your current processes and explore how they could be improved, we’d love to help.
📞 01903 688789
📧 makeithappen@mbsmih.com