How to speed up cash flow from your debtors
High inflation and soaring bills have made companies’ overheads, such as paying for offices and work transport more difficult. You need a robust financial model and importantly a strong cash flow for your business to survive and remain competitive in today’s landscape.
One of the main perils of having cash flow issues as a business is that it can prevent you from being able to pay your suppliers and creditors on time, and that can easily sour client relations and ties.
A vital way to speed up cash flow from your debtors is by making sure you have the appropriate company credit check reports to hand before entering into binding contracts with new suppliers and businesses.
Credit scores and reports will give you a good idea of the likelihood of whether you can be confident of a customer paying you on time. Their credit score will show if they have a positive or negative track record of honouring payments within set timescales in previous dealings.
Fortunately, Creditserve, we are a specialist provider of business credit checks in the UK as well as international credit checks in any country worldwide. Here we take a look into how to speed up your cash flow from your debtors and reduce your credit risk.
Automated invoicing software
Automated payment software is jaw droppingly efficient these days, and one of its benefits is speeding up invoicing processes. Getting the right automatic invoicing software set up can do wonders to speed up cash flow from your debtors. It will help make things easier for your customers and give them fewer reasons to pay you late. Human-led or manual invoicing systems are prone to error, typos, and more, whereas you will find that automated invoicing software will cut out important chunks of time that could eat into your front line. After all, time is money for businesses.
An additional advantage of using automated invoicing software is that it can help a business be more sustainable and save on paper usage. Going paperless is the way forward; there’s no need to cut down trees endlessly. What’s more, having digital trails of invoices is more transparent, but paper invoices can easily get damaged or lost.
Request prepayment deposits
Another way to speed up cash flow from your debtors is to start requesting refundable prepayment deposits from clients. You can choose for a deposit to be an upfront fee of 25% of the overall cost, or you can make it a sum on the side which is fully refunded once the payment goes through. Deposits could act as an effective barrier against late payments from customers becoming a common occurrence.
Provide early payment discounts to speed up cash flow from your debtors
Striving to proactively encourage early payments from debtors can be a good practice to get into. One avenue to promote earlier payments is by offering discounted prices as an incentive for them to pay you in full promptly.
Report your debtors’ payment history
A wise idea to prevent late payments from your debtors from becoming an ongoing issue is to let them know you are prepared to report them to credit agencies. No customer of yours will like having their credit rating downgraded since it will have a negative impact on their business.
Alongside company credit checks, AML checks could also help to ensure you enter into business with new clients who can be trusted. After all, your debtors laundering money or operating fraudulently could mean you struggle to recoup your money from them later on.
Here at Crediserve, we provide competitively priced business credit checks and AML checks which can help to speed up cash flow from your debtors. Our gold package credit checks give you unlimited access to business reports in the UK and Ireland, unlimited access to individual director's reports within the UK, access to 10 online overseas credit reports, and access to our debt collection services.