For small business owners, cash flow can be a double edged sword. They live by their cash flow, but at the same time it can be their biggest struggle. Being National Small Business Week, there have been a lot of tips and tricks published lately to help increase cash flow in small business. However, as great as these tips are, a lot of them just simply don’t seem achievable. Who has the hours in a week to make multiple phone calls to every customer?
The number one tip that has been flaunted as an easy way to increase cash flow in small business is to “train your customer” to pay you on time. To achieve this, they suggest that you call the customer before the invoice is sent to discuss credit terms and the invoice itself. A follow-up call then needs to be made to make sure the invoice was received, to check if the customer had any questions, and to again mention the payment date. Again, a few days before the due date, you need to call the customer and ask if the invoice has been approved and if the customer will be able to pay on time. Once you receive payment, you are supposed to call the customer thanking them for the payment. Many of you may be shaking your heads thinking, “when do you expect me to have enough time to make these calls?”
What wasn’t mentioned in these tips and tricks to increase cash flow in small business was leveraging technology. Making that many follow up phone calls to customers seems insane, unless you have automated the rest of your accounts receivable processes. Using an automated accounts receivable software can increase your efficiency. Where you used to spend 15 percent of your time prioritizing and preparing for calls, you’re now only spending 6 percent. Further, most collection teams not automating processes spend 40 percent of their time managing disputes. That can be decreased to only 13 percent of your time, allowing you to talk to three times as many customers as before.
Automated accounts receivable software is the first place to start in looking to increase cash flow in small business. All the information for each customer is in one place. Most importantly, you can see who owes the most or who is furthest behind on payment through alerts. Once your time is freed up, then you can focus on “training your customers”.