CASH FLOW AND ITS IMPACT ON SMEs
Cash flow is the total amount of money being transferred into and out of a business. Cash Flow is often known as the ‘lifeblood of a Business‘.
For SMEs, Managing Cash Flows is as important as focusing on Growth and Profitability because many businesses fail due to Cash Flow Inefficiency.
Also due to poor management of Cash Flows, Businesses are not able to Sustain in the long term, and hence, they fall under the Debt trap.
And, To Manage liquidity in Business it is important to Get Paid Faster for SMEs from your clients.
Here are a Few Tips that can help Businesses to Get Paid Faster for SMEs to their clients :
COMMUNICATE CLEARLY ( YOUR PAYMENT TERMS ) / SET UNAMBIGUOUS PAYMENT TERMS
Before Sealing a Business deal with your client make sure that they understand clearly about your payment terms and conditions. Let them know about the credit period which you provide, Interest, and late charges. Also, sign a written agreement about Payment terms. Because any confusion in Payment terms can hurt your business in the long run.
Design Invoices so beautifully that the invoice itself has all the details like Order details like Quantity, Price per Unit, payment terms, Tax breakup, etc. Also, you can add your Bank details, BHIM UPI ID, and your payment Barcode so that you can get paid easily.
ASK FOR AN UPFRONT DEPOSIT
Set an Upfront amount or Deposit Say For Example Start Accepting 5% of the Contract price as Advance payment. This will help you in getting paid faster and also act as a Shield against late payments.
You can make this concept more widely used by your clients by giving them some additional benefits for paying an Upfront deposit.
DO NOT PROCRASTINATE IN SENDING INVOICES
Build a Habit of sending Invoices faster to the clients as soon as you rendered your services because as soon as you send invoices the sooner you get Paid.
With an Integrated ERP Platform, you can keep track of your Invoices, Collections, and Receivables. Also, You can Sync your Invoices from ERPs like ZOHO, TALLY, Quickbooks, and Many Others.
Try Relying on E-Invoices as this gets noticed Faster by your clients and also there is no Scope of Making an excuse of Invoices being lost or Misplaced.
REWARDS FOR EARLY PAYMENTS
If you Charge for Late Payments then why not Reward those Who Pays Early. This can help you Get Paid Faster for SMEs from clients. As every business likes Incentives and Rewards.
Also, this will reduce your headache of Chasing Invoices and offer the Incentives which your business can really afford.
For Example – 1% Cashback for Timely Payments
PENALTY FOR LATE PAYMENTS
Penalties work as a far better catalyst for businesses to get Paid Faster. Try setting Genuine Penalty or Percentage amount. Also, Highlight your Penalties in Invoices to Remind them to Pay faster.
For Example – 5% extra will be Levied if Invoices are not paid within 30 days.
OFFER MULTIPLE PAYMENT OPTIONS
In this Digital Era Businesses can’t only rely on Cash Payments. They must offer Digital Payments Infrastructure to their clients to get Paid Faster from them. All digital payment options should be provided like NetBanking, Bank Transfers, Debit/Credit Cards, BHIM UPI and Wallets, etc.
With Connected Banking Businesses can get Faster Payouts and multiple Payment Options in one place.
To increase Digital Payment Adoption by your clients allow them a Nominal CashBack or Reward for Paying through Online modes of Payment as this can reduce your losses in terms of Interest cost.
AUTOMATE MORE AND MORE
In Today’s World, Automation is the Key Factor for SME Growth and Sustainability.
What they can Automate?
Automate Invoice Collection Process by Adoption of Cloud Accounting Softwares, ERP, etc. With This SMEs can AUTOMATE INVOICE COLLECTIONS by Syncing their Invoices from ERPs such as Zoho, Oracle Tally, and many others.
Automating Payment Reminders – Send gentle and timely reminders to your clients.
Try Connected Banking and Auto Reconciliations– Get Paid Faster by connecting Your Banking Partner with Hylobiz Also you can Auto-Reconcile your Invoices and Get Insights on your Business Finances as well.
By Integrating your ERPs with Hylobiz you can make your work Easier and Faster. Improve Relationship with your Customers.
Also get Real-time updates on Order processing, Inventory Management, Pricing, Invoicing, Payments collection, and Automatic Reconciliations.
Also by Automation, you can Save Time and utilize your time on other Important Business Aspects.
DETERMINE CUSTOMER’S CREDIT LIMIT ON THEIR CREDIBILITY ( CREDIT HISTORY )
Assess your Customers Credit Worthiness by Properly Assessing them like Putting a Limit on Customers Credit. Do not Allow a huge credit to new customers. Rather try giving them a shorter credit limit when they are new and increase later on as per the Relation with customers.
This will help you in Knowing your Customers in a Better way and in Re-Evaluating their Credit Limits.
AUTOMATED PAYMENT REMINDERS AND A STRONG FOLLOW-UP SYSTEM
Send Automated Reminders when your Invoice becomes Due and is not Paid.
Try sending Reminders in online Channels like E-mail, Whatsapp, etc and you can manage this well with the help of Automation.
Also, exercise Automation to Implement a Strong follow-up system to Chase your payments and to Reduce Manual Effort.
Never be lenient with your clients on Payment Terms. Also, Don’t exercise Informal Behaviour with Your Clients.
Hylobiz is a Platform that Provides Simplified and Powerful tools for Businesses to Automate their Ordering Process, Payments, Invoicing, Inventory Management, and Receivables.
Hylobiz helps Businesses to Manage their Working Capital, Business Financial health by Providing them with Real-time Updates, Insights on their Transactions.
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