In my last post I covered five key strategies to help you accelerate your cashflow by focusing on your debtors and speeding up the process of getting the money that’s owed to you, into your bank account faster. This time I continue with some other great strategies that will support you further in this area.

• Don’t send out statements – many businesses send out statements at the end of the month thinking that it’s a reminder to those that owe you money to pay. This might work for some, but for many, a statement is simply a reminder that can go to the bottom of the ‘bill’ pile because another one will come next month! Worse still, some statements have an ageing tally at the bottom starting at “30 days” then going to “60 days” and “90 days” and so on. What this says to the client is “I have at least 90 days to pay before things get serious.” Stop sending statements and replace it with a rigorous follow up process like the one I described in part 1.
• Offer different payment methods – sometimes providing a payment plan, finance, or some form of payment funding can make all the difference between a sale or no sale, and getting your money in a timely fashion or having it drag out for months. Just remember to pick your mark. Don’t offer alternatives to poor payers – seek payment up front. And, remember that if you’re prepared to offer flexible arrangements it’s even more important to follow up immediately if a payment is missed. You could even demand the outstanding amount be paid in full!
• Do a credit check before offering funding or extending a flexible arrangement with any client. I get calls on occasion from people doing trade reference checks on some of my customers to make sure they’re reliable payers. I think this is good practice because with some funding arrangements, if a customer defaults on a payment, you could be left owing the outstanding amount yourself!
• Charge interest for late payment – to do this you need to position it before you enter into a an arrangement to supply your products and services. Don’t just hide in a clause somewhere in your written agreement. Spell out explicitly with the client and get them to verbally acknowledge that this is a term of the agreement you’re about to go into. Otherwise, you could become a fantastic “free” line of credit for your customers. Who wouldn’t take that up?
• Keep track of your aging debtors and do something about it. Monitoring the number of days it takes to turn your invoices into cash in the bank account is an important measure because it shows you how long you have to fund the amount out of your own pocket. The aim is to get the number of days as low as possible!
• Communicate openly and often – don’t let things go. It’s a sign of weakness and provides an opportunity for you to be taken advantage of!

Naturally, every business has its own baggage when it comes to debtors. Whenever I work with a client we look at this first and then determine the best course of action. I have found that this is the best place to get a result quickly that you will see as real dollars in your bank account.

So, now you have 6 more key strategies that work to accelerate your cashflow and improve your cash position as it relates to your debtors. Pick one or more and implement immediately!