For many small businesses, it’s all about volume of sales. But without the cash to prove it, it’s a short-lived strategy. Invoicing for payment is one thing, but actually collecting the payment is the main challenge (and downfall) for many start-ups.
Are any of these familiar to you?
My invoices are always sent
It’s about more than simply invoicing your customers; that’s just a tick in the box. What you really need is a comprehensive process that only ends once you’ve received payment.
This should include:
- A credit policy aligned to your business objectives
- Implementation of realistic credit limits
- An adopted credit management culture
- Buy-in from the sales team, customer services and finance
- Creation of a dispute management process
- Billing procedures that are followed and reviewed
- Efficient order to cash practices
How can I improve my cashflow?
Cashflow is fundamental to the running of any business and can be the difference between achieving your growth plans and not.
You can focus on a positive cashflow and the money coming into your business by:
- Introducing a simple yet effective accounting system
- Maintaining accurate and up-to-date reporting
- Applying strict payment terms for customers
- Keeping business and personal finances separate
- Building a cash reserve
- Only taking on necessary external finance
“A client’s shipment was deferred by the customer for 3 months creating cash flow problems which made it difficult to pay suppliers. Pegasus arranged a rolling loan in less than 10 days giving the flexibility for my client to only draw down what they needed. Thank you Pegasus!”