Benefits of Customer and Cash Flow Control

Very briefly, you can reduce some of the anxiety and stress of running your business by having good cash flow control to help you:

• pay your expenses,
• make stock purchases,
• pay wages & super commitments on time
• pay your loan and lease commitments,
• pay your BAS and tax office commitments when due,
• control funds to grow your business!

Have money when you need it:

The first advantage of managing cash flow by using budgeting and cash flow projections, is that you plan to have money on hand when you need it.  It’s critical that business owners monitor cash flow closely so that,

(a) slow paying customers are brought into line;
(b) supplier demands for earlier payment can be met;
(c) wages and superannuation are paid on time;
(d) loan and lease payments are paid by the due date; and
(e) all tax office commitments are met.   

By properly assessing your cash flow processes you’ll be in a much better position to know when to make business changes to weather the inevitable hard times and know when you need to source extra funds to meet all your commitments.

Have funds to expand your business:

The second advantage of good customer and cash flow control is being able to grow your business.  Your business can’t expand when you are constantly cash-strapped. 

• Growing your business will be easier when you can be certain there will be available funds in the business to put into new activity, new staff, or new products etc.
• Trying to expand your business without having good control over your cash flow is doomed to failure. 
• Many businesses fail even though their customer base is expanding rapidly because they didn’t factor in the need for extra funds to finance the purchase or greater and greater amounts of inventory to service the sales.
• Combined with poor customer collection processes, it’s a sure road to collapse to attempt expansion without adequate cashflow to fund it.

Documenting cashflow allows access to loan funds and lease contracts:

The third advantage of having positive cash flow is the ability to borrow money.  

• Well-developed cashflow management will allow companies to see when they will need to access external funds. 
• Being able to borrow larger sums of money for business expansion will be made easier by providing past and future cashflow management documents to show that your business will be able to repay the loans.

Controlling Cashflow from Customers

Every Business Needs Customers

You can’t run a business without customers or clients so it makes sense that you need to keep good records and good control over your customers as the mainstay of your business.  

• Finding new customers is costly and time consuming. 
• Providing exceptional service, as well as quality goods, to new and existing customers will keep them coming back.
• Maintaining a good relationship with your existing customers can help bring in referrals for new customers. 
• Prompt invoicing and offering customers several different ways to pay, will help improve your customer’s experience and have them come back for more or recommend your products and services to others. 

Don’t let invoices sit unpaid

It’s not rude to ask for payment as soon as the work is done! 

• Re-examine the terms you offer your customers.  Asking for a 50% deposit and/or full payment immediately on completion is an acceptable business practice. 
• Using easy-to-access credit card facilities such as Square or Stripe make it easy for your customer to pay as soon as the work is done or product supplied.
• If invoicing later, offer customers several different ways to make payment will encourage quicker payment, e.g., online payments and Paypal. 
• Don’t put off contacting a difficult customer to chase payment.  The longer you leave it , the more you risk them not paying at all.  After all, if the customer sees that you’re not really bothered if they don’t pay (this is evident to customers when they don’t get any follow up statements, reminders or phone calls) then why would they need to pay?  These customers are basically being financed by you!  This means that you have to keep sourcing more funds to buy more stock to service other customers!
• If you wish to separate your customer service from debt collection, then Cash Ways can manage customers who need follow-up for late payment and help set a process of how to deal with accounts that may need the services of an external debt collector.

Customer Control for Business growth

• The benefits of good control over customers and encouraging quick payment, leads to better control over cash flow.
• Knowing when your customers pay can help you plan for future growth.
• If you always win (say) 50% of your quotes, then it makes sense to focus your expertise on your business and leave the bookwork to experts! With Cash Ways doing your bookkeeping and you winning and delivering more quotes, your business will thrive.  Why would you use your valuable time in trying to figure out how to do the bookkeeping properly when you know you will win more customers with the extra time you have to spend on quotes?
• It can often help if there is a separation between collection of payment and the sales team.   This can leave your sales staff being able to provide new products and after sales services to customers rather than the awkwardness that can arise when sales staff have to deal with slow payers.