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Business cash flow : getting paid faster

David Rynne - Monday, August 26, 2013
Common questions that accountants are asked by owners of service based and creative businesses : "How to I improve my cash flow?" and "ow do I get paid quicker" ?

There is no magic answer, no set remedy to cash flow problems: only a series of processes that service business owners need to implement.

1. Make it easy for customers to pay. Anything you can do to reduce friction in the payment process helps. If your using Xero, can include a link in your emailed invoice to payment options such as PayPal or eWay.

 


2. Agree scope and terms up front. What, Who, How, When: Be clear on what you will do, how you will do it, who is responsible for what and by when. Payment terms and conditions must be agreed upon and signed off before any work is done. Never allow yourself become invested in a job before agreeing terms.

If the scope of a job cannot be worked out initially, then ensure your agreement has an allowance for initial scoping work.

3. Record your time. Everyone hates timesheets. But the simple fact is that you need to know what customer project or job you are working on for when. From personal experience, by keeping meticulous timesheets, it is far easier to recover work which is out of scope.

4. Require an up-front payment. This will show prospective customers that your serious. Bill work periodically. Stop work if your terms are not adhered too.

5. Have solid trading terms and stick to them. Email statements frequently, have someone call and document what is agreed. If that fails, never be afraid to refer someone to a debt collection agent.