This short article reviews three simple and effective methods for you to increase the cash flow for your small business. More specifically, these methods help you turn accounts receivables into cold hard cash that your small business can use today.
Some of these cash flow strategies may take a little time to put together, but you’ll find that the resulting cash will be worth the effort. By applying these strategies, you’ll be joining the thousands are small business owners who are taking a look at resourceful ways to get paid sooner.
one Make It Easy for Your Clients to Pay
It’s only logical that your clients will pay you sooner if you make it easy for all of them. Here’s how. First, when you set up a relationship with a client, state your payment terms and options in advance. Let your clients know whether or not you accept cash, checks, bank cards, and online payments.
Second, begin accepting credit cards. As your clients begin experiencing their own cash flow crunches, they will want to manage their cash flow by utilizing credit cards to pay for services. By receiving credit cards, you will increase your chances of becoming paid in a timely fashion. These days, small businesses which range from plumbers to accountants are taking credit cards-and seeing an surge upward of cash flow as a result. Although you will have to pay 1-3% to a credit card processor, the increase in your small business cash flow associated with fees worth paying. Remember that 90% of business failures are due to cash flow.
Third, consider accepting on-line payments through services such as PayPal, Verisign, Quickbooks, or Authorize. internet. Your clients are every bit as busy as you, and by allowing them to pay online, you allow them to handle payment at a convenient time, which may not be during regular business hours.
second . Don’t Be Afraid to Ask for Your Money
Research shows that friendly reminders, along the lines of, “Did you get my bill and when can I expect payment? ” can considerably increase payment rates. Before you start asking for payment, be sure that you have made your payment terms clear at the outset of your romantic relationships with your clients. Next, use software program to track the age of various accounts receivables so that you can easily list late-paying clients, and start calling with friendly reminders. Finally, if necessary, consider using an outside selection agency for extremely delinquent balances. Use this option with caution, because you can negatively impact your business relationship along with your late-paying clients, or others who know those clients.
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Balance Your Client Base for Steady Income
Depending on how you typically bill with regard to products or services in your business, you can make a steadier flow of cash into your business by using different payment structures for different clients. For instance, if your business is seasonal or experiences fluctuations in income, consider switching some clients to a retainer-basis so that the monthly cash flow is steadier. With a retainer, you offer your client a certain amount of services or products for a fixed fee per month. To encourage clients to switch over to this process, consider throwing some bonus products or services into the mix or offering a slight discount. While this might cut into the profit margin a bit, you will get the advantage of more regular cash every month.
It can take some time to implement these strategies. For instance, if you decide to accept credit card obligations, you will need to set your business up with a merchant services company. Similarly, if you opt to move some of your clients to some retainer basis, you’ll need to spend several quality time with those clients to persuade them that a retainer is a win-win solution. However , you’ll find that if you invest this time and effort up front, your bank balance will reflect a much healthier cash flow, which is essential in today’s tough economic times.