According to the Australian Bureau of Statistics, more than 300,000 small businesses started every year. Less than half the make to mark four years.
There is also a saying in business: “Profit is a queen, but cash is king.” If you are a business owner, it is very Digital Marketing Company Bath important that you understand the difference between profit and cash, especially with the economy still on and banks are reluctant to lend. It can determine whether your business survive or fail.
So how do we do each other a favor and pay all your debtors before Christmas? Let’s all get on the nice list before its too late!
We know running a small business can be tough. long hours, the need to wear many hats and constant stress cash flow. Maintain a steady cash flow may become heavier over the Christmas period when employees, contractors and bills to be paid and revenue still slow for some businesses like ours.
It is therefore important to ensure that the debt be kept under control, especially during the Christmas holidays. But what if there are clients who are behind in payments or just simply refuse to pay on time, or even at all?
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The short of it is that you need big savings buffer to get through the holidays or simple just a rainy day. HR Advisor we recommend that you should have a ‘cash cover’ to be able to pay your staff for 3 months in the bank at any time as a safety net, not to mention the funds set aside for pension payments quarterly, BAS and tax.
So how many clients do you have in the naughty list? People that you must constantly pursue to ensure they pay for the service you have contracted to provide and have provided. The service at the time of signing off apparently required ‘urgent’ and ‘immediately’ but that payment for services not seem to have the same requirements.
Once an invoice is issued most of the business will set a due date – often 7 days, but the reality of the average client’s time you took to actually pay can double or even more than this.
invoice reminders automatically sent to the client at key points within the payment period can be really helpful. We sent one in 7 days (due date), 10 days (a friendly reminder), 21 days (getting louder) and 30 days (to let the clients know that if we do not hear from them, the matter will be referred to a debt collection). This may sound cruel but in our experience necessary. Without at our cashflow is much worse than usual. We learned the hard way earlier this year when we find one of our team has been deliberately turned off all reminders invoices to all clients. Talk about cash flow slow down! when we turned it back on, things improved immediately. Thank God!
The fact of the matter is, some clients are repeat offenders and begged foolish to have ever received any communication and did not know the money was for. Unfortunately for them, we can know that the invoice has been seen and we quite often send an email to more than one account and call more than one phone number. Sometimes we even send messages on Facebook or via the contact form on their website if we have to. But it took a tremendous amount of admin time, sometimes just to cover less than $ 100.
So what we do is client naughty? Do we accept that they are a small business and money may be too tight? Or is it just a vicious circle in a small business that no one can afford to pay the bill because there is no receiving money from their clients on time?
We think the key is to set expectations up front, and enforce them. We also offer several methods to pay us Digital Marketing Companies Bath including direct debit selection, the ability to pay online using a credit card and bank transfer. We are even in the process offers the ability to make payments in Bitcoin and other cryptocurrency!