Melbourne small business accounting tips to ease your cash flow issues
As Melbourne small business accountants, we see the struggle everyday that Australian small businesses have with their cash flow. The ability to manage your cash flow can often be the difference between success and failure within a small business. Here's some tips to get you on the right path.
- Evaluate your terms of trade
This is extremely important for every small business. The evaluation of your trading terms should be done on a yearly basis. You are not writing an English essay, so use simple, clear and direct wording because you will want people to understand what message you are trying to send across. You have to decide if cash on delivery is acceptable or not. You have to indicate in your invoices the day limit to pay for goods or services. Is it 7 days, 14 days or 30 days? To ensure that you get paid on time, you need to be specific in whether payment should be received in 14 days upon receiving the product or upon receiving the invoices.
- Have a good debtor control system and check on your debtors
How are you going to do that? Easy, utilise technology advancement! A cloud-based invoicing and receipting program enables sending out reminders according to timeframe set by you. Or if you have the time, call your debtors up to give them gentle reminders before the deadlines.
- Make payment options easier for people to pay you
If it’s easier to pay you, the likelihood of people paying you is higher. Consider methods like paypal, direct debit systems and direct credit etc so that Melbourne small businesses find it easy to pay you!
- Reward and punish
Provide incentives to your Melbourne small business clients if they pay early, for example, offer discounts for upfront payments. On the other hand, punish those who pay late by charging them interest on late payments.