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Cash Flow tip – How we smoothed out cash for this business
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Published on Thursday, 29 February 2024 15:35
David faced the common business problem - feast and famine - money coming in then drying up and more bills to pay!! He struggled to achieve steady cashflow because he was pulled between all the many tasks a growing business owner must juggle!
WE explained to him a system that improves getting paid and is more consistent than the old traditional monthly statement and phone call method of traditional business practice (and only have to use as last resort).
How we improved the cash-flow problem
Adam, his IT specialist, called us in for regular weekly help – this frees him up to work on what he did well, and win more clients to grow his business!
- We got all his bills to pay, nagged him to check all his emails and that all bills were emailed to our account email, and entered them in the software – about 10-15 min work – now there is a list of what is due, and when! Up to date!
- We reconciled the bank for the last month, and reconcile weekly (because the accountant office was reconciling it monthly. Filed paid invoices, checked and entered what was owed, reconciled the credit card - got it all up to date.
- Weekly, we report on clients due - debtors - accounts receivable, in an aged report to be able to easily see what was overdue – the business had 7 day terms - of course many larger businesses ignore and still pay on 30 day cycles! There were 12 well over due, 5 just a day over due, and 10 not due as yet
- Reminders - emailed all over-due outstanding receivables with a friendly tone, and “REMINDER” at the start of the subject message so it stood out.
- System - now we send reminders FORTNIGHLY - not monthly! It’s too long and people forget! And for those well over due - WEEKLY email reminders
RESULT –
- In 3 weeks the old 12 outstanding accounts were up to date except 1!
- Only 1 client needed to be called after several reminders, excuses, requests for invoices again by accounts – the usual delay tactics that indicate possible cash flow issues!
- Regular clients realised we were on to them straight after the 7 days due!
- 70-80% now pay before, on time, or a day or two after the time due!
- Client has regular income to cover expenses!
- Client is sleeping better and serving prospect and new clients with more enthusiasm and energy!
- Low costs – all this weekly for under a few hundred dollars!!!
- Peace of mind with professionals handling what they can do very well!
Need help? Not sure? Call for FREE 30min advice / strategy session today! 0407 361 596 Aust
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