Jun 19 2012
Sage One Thing Part 2: Change One Thing About How You Run Your Small Business
By Lorna Keogh, Sage Business Advice Manager
- Change ONE thing about how you invoice
- I spoke to a business owner recently who told me he found it hard to get paid for work. He also told me he was behind on his invoicing by two weeks. This meant that after receiving the product or service right away his customer might wait two weeks to get an invoice form him and may then take 30 days or more to pay him. My advice? Be smarter about invoicing. Time is precious so why not spend a little extra time getting an invoice out immediately than spend a lot of extra time selling first and following up after wards? When selling to a customer agree your price and create an invoice. This invoice can then be brought with you when meet the customer to provide goods or services or it can be emailed to the customer the same day that you despatch the goods. Invoicing on time means that you can age the debt from the day you make a sale and can produce up to date statements to send to customers if need be.
- Change ONE thing about how your customers pay you
- As mentioned above sometimes it is hard to get paid. When it takes longer to chase payment than to make an initial sale maybe it is time to do things differently. Selling online is a great way to ensure you collect credit or debit card payment up front and allows you do to so around the clock. Using a product like Sagepay will also allow you to collect credit or debit card payments securely on an ecommerce website and over the phone. Sometimes customers may not be in a position to pay up front and this is where either offering a subscription model or allowing direct debit payments to be spread out over a set time frame may make it easier for your customers to do business with you.
- Change ONE thing about managing your cash flow and suppliers
- In the small business market we hear so much about the importance of cash flow planning that it can be hard to put it into context. In a nutshell cash flow planning is about balancing the incoming revenue to the business and the essential outgoings. In the ideal world a business would receive money in quickly and pay out slowly. While this may not always be easy to do some of the tips above will assist in either receiving payment up front from customers or in spending less time chasing outstanding payments. In terms of balancing money going out of the business it is important to manage suppliers effectively. A good computerised accounts package will allow you to record details of your suppliers, the terms you operate on with them and to record details of each invoice you receive from that supplier. This in turn will allow you to run an aged creditors report showing you what is owed to each supplier and how long it has been owed. This will help you to prioritise payments to suppliers ensuring that you stay within terms and build good relationships which in turn may lead to better credit terms. When dealing with expensive outlays it is also worth investigating what payment options such as interest free direct debit your supplier will offer you.