Get Paid Faster to Optimize Cash Flow

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Small businesses rely on a healthy cash flow to keep their businesses going. Part of having a good cash flow is making sure your clients pay on time. Here are three tips for getting paid faster, which in turn, optimizes cash flow.

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Get Paid Faster to Optimize Cash Flow

  1. 1. Get Paid Faster to Optimize Cash Flow Small businesses rely on a healthy cash flow to keep their businesses going. Part of having a good cash flow is making sure your clients pay on time. A delay between the time you pay your employees and overhead and the time you collect from your clients can really have a negative impact on your cash flow. Here are three tips for getting paid faster, which in turn, optimizes cash flow. Take Credit Card Payments With the advent of online banking, checks have taken a back seat as a preferred form of payment. Instead many customers choose to pay via credit card. Especially in today’s tight economy, customers want the option to pay for purchases upfront with a credit card and then pay off the balance over time. Many small businesses are hesitant to accept credit cards because of the high processing fees the major credit card companies charge. However, by accepting credit card payments, you ensure that you receive payments on time. Instead of waiting for a customer to mail in a check, then to have to go deposit the check and then wait for the check to clear, credit card payments post to your account right away. Your clients will feel more comfortable paying their invoices by credit card as it gives them time to pay off their balance over time, while still paying you in full. Look to see if accepting credit cards is possible for your business by crunching some numbers. On average, credit cards charge a 2.5% fee per transaction. Look at how much it costs to bill a client and collect the bill and compare. You may find that credit card payments will actually cost less than the total cost of billing. Require a Deposit Having a policy that requires a deposit up front is a good rule of thumb for service businesses. Having a deposit at the start of the job ensures that you have cash in your account to cover payroll before you even start the job. You don’t want to spend a lot of time and effort working on a project for a client, and then have the client not pay on time. You need to be compensated for your time because you need to have money in the bank to pay for your employees and operational costs. Like a credit card payment, putting a deposit up front also helps the client split the cost of services into sections. They pay a percentage at the beginning of the project and then pay the balance when the job is done. Streamline the Billing Process The old school method of creating invoices, mailing them, and then collecting payment requires a lot of time, time that you could be investing in other parts of your business. Setting up automated processes for creating and distributing invoices can speed up the process and improve efficiency. Perhaps you set up a system that emails clients invoices or you outsource billing to a billing services provider. A streamlined billing process saves time, keeps billing on track, and helps you get paid faster. About The Author GrowthForce (http://growthforce.com) provides growing businesses with cloud-based bookkeeping and controller services, delivering timely and actionable financial intelligence. By leveraging teams and technology and The Cloud, our dedicated U.S. based service professionals optimize and integrate your accounting and financial systems, standardize and automate processes, and perform the daily/weekly/monthly finance functions from our secure hosted environment.

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