The Number 1 Thing You Should Focus On in business

As a small businesses owner, particularly those that are just starting out, having good cash flow means employees are paid on time and business expenses or bills get paid completely. The opposite is also true; poor cash flow means living invoice-to-invoice, chasing debtors, and insecurity for employees and creditors.

So what can a small business do to improve cash flows and bring in more certainty to their business?

Often when small businesses run into cash flow trouble, they focus on things like increasing sales or reaching new customers. While these are worthwhile goals, they actually aren’t the best way to improve cash flow immediately. Instead, the answer lies in the tools or platforms you use for getting paid faster from your customers and speeding up payments settlement times to receive your funds sooner.

Why Getting Paid Faster Is Key to Healthy Cash Flow

Cash flow is much more complex than it would appear at first glance and a cash flow crunch isn’t simply a matter of not doing enough business. In fact, our study found that the problem isn’t that small businesses and self-employed workers don’t have enough funds in the pipeline – it’s that they don’t have the funds readily available when real-time expenses pop up.

The research also found that the main cause for this high number of outstanding receivables isn’t that customers aren’t paying on time, but rather it’s due to the amount of time it takes to process payments. Even though you may “get paid” – i.e. the customer swipes their credit card or pays an invoice – it may still take days, even weeks, before that money hits your accounts.

Strategies to Speed Up Payments

Recognizing the vital importance that payment processing plays in maintaining positive cash flow, how can you speed things up? Here are some strategies you can implement immediately to improve your payment processing, overall cash flow and help you sleep better at night.

Embrace Electronic Invoicing: Despite the digital world we now live in, many small businesses still don’t have credit card enabled invoices. Manual invoices unnecessarily slow down the payment process. Who has time to wait for a paper check in the mail? By introducing electronic invoices that are credit card enabled, you can drastically expedite payment.

Additionally, with advancements like progress invoicing, small businesses can bill customers for ongoing projects and get paid even before they begin their work using advanced deposits or incrementally as they complete stages of a job, rather than waiting until the conclusion of a long project to receive payment.

Demand Next Day Deposit: Normally when a small business is paid with a credit card, whether it is swiped in a store or keyed in manually, it can take up to three business days for the payment to post to their bank account. For Automatic Clearing House (ACH) transactions this can take up to five days, sometimes even a full week.  But this delay doesn’t have to be the norm! The payments industry needs to innovate to provide next day deposit on all credit card and ACH transactions, and small businesses should ensure their payment systems function is up to date with this new standard. With solutions like QuickBooks Payments, merchants receive the benefit of next-day funding for both credit cards and ACH, so money gets into their accounts the next business day and small businesses gets access to funds they desperately need right away – helping them with one of the biggest pain points they face: managing cash flow!

Cash flow is without a doubt one of the toughest challenges you’ll face as a small business owner. By ensuring your tools are up-to-date and embracing electronic invoicing payments and platforms supporting next day deposit, you can easily and immediately improve cash flow and your overall odds of success.

 

 

SOURCE: SMALLBIZDAILY.COM



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