Don’t dawdle with your invoices
One way to start climbing out of a cash flow hole is to make sure that all future invoices go out on time. Running an SME can be tough, but it gets a whole lot tougher if you don’t set up a solid routine of invoicing on time.
Shorten your payment terms
If you are struggling with irregular cash flow, one possible solution is to shorten your accounts receivable payment terms. Instead of billing on a 30 day cycle, bring it down to seven days. This may help you to have cash when you need it, rather than waiting till the end of the month.
Use invoice financing
If you are unable to move your terms to seven days, invoice financing might be for you. Through invoice financing you can unlock the cash tied up in your accounts receivables almost immediately, and then pay it back when your clients pay their bills. Invoice financing can be a great way to overcome the timing issues surrounding your accounts receivables and payables.
Push for more payment upfront
If possible, investigate asking for part-payment of a sale upfront, or increasing the amount that you ask for upfront. You may also be able to spread remaining payments over the life of a project so that you are able to cover ongoing expenses as they occur, rather than waiting for a lump sum at the end.
Act quickly when a client goes overdue
Sometimes it can be awkward to send an email or make a call when a client hasn’t paid on time. You might feel that you are unnecessarily harassing the client, but if you don’t act quickly, you may begin to lose power in the situation. By acting quickly you demonstrate that you are assertive and have full knowledge of what has occurred. In addition, if you don’t act quickly this time, the client may try to get away with more next time.