How Can Adjusting Your SMEs Payment Process Can Help Ensure A Steady Cashflow?
For every small and medium sized business there is a common goal, and that goal is to make a steady profit. The key to creating success is by ensuring your SME has a steady cashflow and a good financial plan.
When starting out this might not be the easiest feat, but you can begin by adjusting your payment process to be the most efficient and organised system possible.
By allocating your spending wisely, bringing in revenue and hoping that the latter amount outweighs the former, you are on the path to success. If you can keep profit coming in year after year, you are clearly doing something right. However, this still doesn’t mean your payment process is as good as it possibly can be. So, here are some ways that you can tighten up your process, to ensure you have a steady organisational cashflow, and make a good profit as a result.
Be Aware Of And Clarify Your Balance Sheets
You need to know exactly what expenses and revenue are coming in and going out of the business. This way you are able to understand the overall financial health of the business and see if there is anything in particular stopping you from making a healthy cashflow.
Another additional problem that is common for SMEs, is that payments aren’t always made on the same schedule, which is where common cashflow issues often arise. To help keep a hold of this, it is wise to have an additional balance sheet that shows when funds are expected to be moving in and out of your accounts during each period. This way you can prepare as much as possible for what your cash flow could look like. Preparation is key.
Ensure Your Invoices Get Paid
Having unpaid invoices can be an extremely stressful time. While invoices hold the promise of revenue, they aren’t very useful if they aren’t paid. Ensure that your payment terms are extremely clear, as this has been proven to make it easier to set boundaries for payment and have clients actually pay their invoices.
Choose a time frame for collecting debt, such as 30 or 60 days, and stick to it, you’ll be happy that you did.
Consider a Reliable Source Of Funding
Unfortunately, no matter how hard you try to plan, running an SME can be unpredictable. Sometimes a smooth and stable cash flow just isn’t as easy to achieve as you want it to be. However it is still the key to profit, so a great option for SMEs is to consider a much more reliable source of funding. If your customers aren’t paying what they owe, then this is a problem, and it might be time to look into invoice finance.
Having a reliable source of funding such as Invoice Finance, means you won’t have to worry about a lack of payments coming through. You can still have a steady cashflow, despite late payments.
Cash flow is always the key, so ensuring you have the right payment process is a sure way to keep everything in check and put your SME on the path to success.
If your SME is looking to learn more about Invoice Finance, get in touch with the Grow finance team today, call 1300 001 420, or visit our website to find out more.