With cash flow it’s a case of fail to plan, plan to fail.
The need to be smart about managing cash flow is currently more important than ever. Traditional finance providers have never been more reluctant to lend to SMEs, and at the same time, large corporates want to hold onto their cash for longer and are doing so by extending payment terms to their smaller suppliers.
Fortunately, there are measures business owners can take to avoid the squeeze.
1. Cut out mistakes
Processing payments within large organisations can be a long, arduous process with several opportunities for bottlenecks to emerge. It’s vital that suppliers don’t give their customers any additional excuses for taking their time.
Too often, simple errors such as invoices being issued with incorrect or missing details can lead to weeks of delay. Implementing a simple internal checking procedure to be followed before any invoice is sent out will cut down on errors and see you get paid quicker.
2. Build a rapport
A good relationship and simply being more than a name on a piece of paper can make all the difference when it comes to getting paid on time.
In most cases, late payment of suppliers by a large corporate is not a conscious decision on the customer’s part, rather it occurs as a result of the slow-moving bureaucracy and multi-layered natures of the organisation.
Getting front-of-mind with the relevant people will help ensure that when your invoice comes in, a greater effort will be made to get it paid.
3. Chase your payments
Often suppliers will refrain from chasing payment from large corporates for fear of jeopardising their business. But this shouldn’t be the case. Companies will be glad for the reminder – just make sure not to do this in a hostile way. In all aspects of doing business, diplomacy and respect are required and these principles are crucial to uphold when chasing payments too.
4. Build up cash reserves in the good times
Businesses should strengthen their cash reserves and set up credit facilities when times are good. The reality of accessing funding is that the less finance a business needs, the easier it will be for them to get.
By thinking ahead they’ll get more funding at cheaper rates than if they were to seek finance during more austere times. Despite an upturn in the last few months, economic uncertainty is still widespread and the savvy, prudent businesses are the ones that take advantage of opportunities when they can.
5. Seek out alternatives
The ongoing retrenchment of the established funding providers has seen the emergence of a new wave of finance providers that are ready and able to support ambitious, growing SMEs.
While much has been made of the rise of alternative finance in the last few years, awareness amongst business owners of these new funding options remains low.
Equity crowd-funding sites, peer-to-peer lending and invoice trading platforms are increasingly providing SMEs with funding solutions that use technology to offer speed, transparency and flexibility never open to them before.
Seeking out these new alternatives has helped thousands of businesses in the last few years access the capital they’ve needed to launch new products, hire new people and expand into new markets. The hope now is that more business owners will begin to do the same, and embrace what is a new age of business finance.
How MarketFinance can help
It’s quick and easy to access funds, which means you can get the cash flow you need to get on with business. With MarketFinance, you get:
- Fast funding: quick funding decisions and set-up
- Hassle free experience: easy to use digital interface
- Help in real-time: personal customer support
- Straightforward costs: no hidden fees
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