Make Sure Your New Business Gets Paid

What is the number one challenge facing any new business?

That’s right….cash flow…you may have the best idea in the world, the best plan and the best product but without managing cash flow effectively it could all end badly.

Management of the cash into and out of your business in year 1 should be a critical part of your business plan as many businesses go under because they haven’t budgeted correctly for regular costs and delays in getting invoices settled by customers. The careful management of payments by clients and late payments can be the difference between success and failure especially in a recession or a slow growth market. Irrespective of what industry you operate in economic downturns means that more people and businesses will hang on to the money for longer. Small business owners can do a lot to help themselves by making sure they have they have control and the right processes for managing this important area of their business.

Here Are Some Tips To Help Make Sure Your Business Gets Paid On Time…

1. Set Payment Terms To Suit YOUR Business – If in any doubt about getting paid from another business or client especially if they’re new, ask for part payment up front – you may also wish to have different invoicing terms for brand new clients and these differences should be reflected on your written invoice. You should set the payment terms that reflect your needs as a business
2. Make Your Invoices Work For You – Make sure you invoice clearly states the payment terms, what happens if there is non payment and HOW they can pay. Your invoices should be regularly updated to reflect any changes to your payments processes or contact details
3. Review Your Payment Processes – Make sure you have good invoicing processes and set up email auto-responders that you can easily trigger and manage to remind people about payment dates. You should also diarise invoice dates so that invoices are sent out in good time. It also gives a clear message to other business owners that yours is a business with solid processes for payment and that you will chase any late returning invoices
4. Manage late Payments Properly – As soon as sn invoice becomes late phone the debtor as soon as you can to discuss (amicably) the way forward. That’s what the ‘big’ companies do and although you are a small business you should be no different. The companies that do phone first and establish a plan to be paid are the ones most likely to get their money back
5. Incentivise! – You could of course offer discounts for anyone paying early which will of course also help with cash-flow

This is just one of many key parts of your year 1 business plan. To keep up to date on what else you need to think about sign up for our ‘Weekly Email Business Coach’ which gives more business coaching tips plus business start up advice and checklists.

Sign up here for your own ‘Weekly Email Business Coach’

Find out more about our business start up workshops