We asked local credit management specialist, Nicki Kinton, founder of Confident Cashflow for her best advice on how to keep your business cash flowing this year.
- Doing due diligence is crucial. When times are looking tough ahead, it’s easy to fall into the trap of agreeing to sell to anyone who asks, but to protect your business, you should be more choosy. Doing some due diligence on a customer before they buy from you can help you establish their ability to pay you on time and allow you to decide whether to offer any credit terms or insist on payment in advance. It’s not about saying no all the time but finding ways to say yes that don’t put your business at risk.
- Understand your customer’s payment process. It’s easy to assume that they will pay within your terms because they agreed to them. Still, most businesses with multiple employees will have a set process for approving and making payments. It won’t necessarily be the person who places the order that will be responsible for making the payment. If you have discussed and understand the process, you can decide whether to accept where that doesn’t align with your terms, for example, a single payment run at the end of every month.
- Use credit limits and stick to them. Credit limits are an essential tool that will quickly indicate if the customer’s payment or buying habits are changing. When customers are approaching their credit limit, it’s a prompt to do some fresh due diligence and have a conversation with them. They provide leverage when asking for payment and protect your business from overextending credit to customers who can’t pay.
To find out more about Confident Cashflow visit: www.confidentcashflow.com