Managing your business right is imperative to your success. Current studies show more than 30 billion pounds is outstanding for SME debt. This means that customers are not paying their bills on time and SME businesses are suffering. There is often a reason a small business is given a five year mark to make it. Many do not make this length of time when they first open because business is tough. It is tough to get consumers, keep them, and ensure payments are rolling in. When there are problems with organisation, time management, or cash flow it all leads to trouble in business.
Some businesses suffer greatly from a lack of organisation. Instead of buying software that can help out a small business or hire a bookkeeper many try to do everything on their own with the programmes they already have. This is not the right way to look at business success and increasing cash flow. Rather than allowing 2014 to be a year of more missed sales, credit issues, and overall cash flow problems consider the 10 hints provided here.
- Good stock management is imperative to your success. Stock management is about having the inventory in your store that your consumers are going to want. This means you have to stay on top of market trends. You also have to make certain that you take inventory to see what you are selling out of and what you may not sell a great deal of. In this way you can manage your stock better and gain client interest.
- Next, decide if you really want to offer store credit. Taking on credit card payments is a great way to sell people items, but if you give store credit there is nothing to back you up. The store can lose out because a person may be less inclined to pay their store credit than they are to pay a larger credit company.
- If you are going to have credit then you need to manage it well. Receiving payment on time is important to your success. Before you hand out any credit you need to make certain the person has the habits and background to sustain your store credit. If they have missed payment history then they will often repeat.
- Never make your sales people earn commissions with credit sales. Making credit the bigger concept for your sales people is going to have you selling to clients who really cannot afford it. You want your people to be on time with payments, thus you should look for different ways to sell your credit to the right person.
- Along with good credit management and not making it a part of sales, you will want to have clear rules for your policy including specific timeframe and limits. With clear rules and stating when a payment is overdue you can be certain to get your money on time.
- Software for cash management is definitely an important tip to follow. In this way you can look at your credit condition. You can look to see if you are out of stock, if you need to receive payments, and if you have an imbalance in your cash flow because of missed payments on your end too.
- Make it clear that you accept multiple forms of payment when you send out invoices. By taking more than one form of payment you make it more convenient for your customers to pay you. If it is not convenient for them then you could end up missing payments due to a lack of way for the client to pay.
- Speaking of invoices, you do not want to delay sending out invoices. You have to get paid on time so that you can manage your own payments to vendors. If you forget or just have no time to send out the invoices then you will want to get a bookkeeper in to help. Whatever you do make sure you send out invoices each week.
- Discounts are a great way to increase your cash coming in. If you offer a pay right now discount the person will often pay, but if they do not have the money but will have it later on they will be happier to sign up for credit and wait for the invoice. This is because you can also offer an early payment discount, which should be slightly less of a discount than the in store discount. Most often consumers want to save money thus they will make certain to pay on time or early when there is an incentive.
- Make certain to set up a collection policy. This policy should be clearly displayed in the store and adhere to UK laws. You cannot hound a consumer especially if they are only a few days late. However, you can always send a gentle reminder and state what you expect. In this way if you have to get money through a collection agency or court appearance you have proof you did everything correctly.
To keep cash flow moving smoothly you have the right to take steps when clients do not pay on time, but remember you can also learn about your clients and what they pay like. Some clients are always late, so consider what you can do to make it easier for them.
When you are in business it takes a great deal of time, energy, and money to keep it going. Whether your business is new or just suffering because of the economy learning the above hints regarding cash flow and better management will help you. One thing to keep in mind is that you have to be just as good as your consumers.
If you do not have the organisation or discipline to get money out to your vendors and for all other expenses, you cannot expect the same from your clients. In fact if you are late with invoices then you certainly cannot expect the client to pay up immediately. Being on time will help your clients be on time too.
John Gary is a small business owner with expertise in money management, he write for LeraBlog and the information in this article was provided by merchantmoney.co.uk.