As the 1st part of the 'Show Me The Money' blog series, we are going to focus on understanding on 'which customers are good for business and cash flow'.
Too often businesses trade themselves into insolvency as they don’t manage the most important part of the trade cycle - getting paid. 60% of Australian SMEs are unlikely to get paid after 30 days. Failure to effectively collect on your invoices can crush cash flow and lead to the demise of your business.
Dedicating more time and labour into invoice collection will always yield results by decreasing days outstanding. This may be best managed by employing a collections officer, outsourcing to a bookkeeper or, if you are factoring, passing the responsibility to them to collect on your behalf. When deciding which option to go with, the most important factor to consider is the customer relationship. It is imperative that your relationship with your customer is never impacted by the actions of invoice collection.