Your growing company may look great on paper, but if you’re barely making payroll and sitting on a stack of receivables, you could be cash-starved. Managing your business’ order-capture-to-cash rate is often critical to long-term success.

You sell a product or deliver a service, then wait to get paid. You know those slow payers will eventually make good on their debt. They’re long-time repeat buyers, but they’re also buyers to whom you’ve extended interest-free capital in the form of net 30, net 60, slow pays, collection costs, and other factors. A stack of sound receivables is a nice problem to have, but it’s still a problem that needs to be addressed.

How do you speed up cash flow? What’s needed for you to grow the bank account balances that create opportunities to expand and add real value to your business?

1. Capture payments remotely. Ask your bank about devices that turn your company’s smart phones into payment centers. Mobile card services can help your smart phone accept credit cards and debit cards – including EMV chip cards – and they are compatible with most Android and iOS devices. If you have service providers or delivery people in the field, it makes sense to have them collect payments at the time the goods or services are delivered. No more waiting for them to return to the office with credit card slips or paper checks.

Even more, you save on collection costs. No more paper invoices. No “checks lost in the mail,” no more free credit, no postage – it’s all done using secure, highly-encrypted smartphone technology that delivers payment to your account faster and at greatly reduced cost.

2. You can also deposit checks remotely from your office using a desktop terminal that scans the checks and converts them into electronic payments that go directly into your bank account. No more deposit slips to fill out, and no more trips to the bank.

3. Next, what does your company invoice say about payment? To some business owners, an invoice is free money for 30 days, maybe even 60 days. If you give some company owners latitude in payment, you may not hear from them for a couple of months – even from your regulars. Cash tight? “Good ol’ Bob will understand. Pay that one next month.” Guess who’s not going to see a check for weeks?

4. Make payment terms part of any contract or business agreement. Set payment milestones for existing clients and create a good impression by clearly stating payment terms in words regular people can understand.

If you do deliver products or services, get a down payment. It gives buyers a reason to sell, and a reason to pay you. Keep it simple. If the agreement states monthly invoicing, your collection costs just went up.

5. Offer more payment gateways. The easier it is for clients and customers to pay, the more likely you are to actually get paid. Set up a PayPal® account. Ask your banker for a referral to a company that can set you up with a point-of-sale payment terminal so you can accept debit and credit cards.

6. Check credit histories. Before you deliver services or goods to a new client, perform due diligence. Go to the company website and read the About Us page to find the names of company principals. Newer businesses may not have extensive credit histories, so pull credit reports on company principals before extending credit – net 30! Good personal credit usually indicates a responsible risk who just became your newest client.

7. Move company funds automatically on your schedule. You can increase the benefits of online banking with a simple dashboard and access to company accounts on your schedule. Set up cash transfer dates to move money out of interest-bearing money-market accounts to your payment account to make payroll each week.

Not only does online banking speed up cash flow, it allows you to put that money to work for you. A business money market account can hold business capital until it’s needed to finance routine operations.

8. Fulfill orders ASAP. An order that’s sitting unfilled is costing you money. Once again, you’re extending free credit to buyers by allowing payment at some time in the future. Back orders also slow cash flow to a trickle. If you can’t ship, you don’t get paid. Pack it up. Ship it out. Invoice. Repeat.

9. Offer incentives to pay. Offer a discount if an invoice is paid immediately, or within seven days – whatever terms work for your business. Smart consumers – the people and companies that send your business money – will take advantage of a percentage-based discount and pay you first.

Here are the key takeaways:

  • provide contracts with terms of sale and delivery
  • offer more ways to pay
  • use remote payment capture to deposit payments quickly
  • lower collection costs by going paperless
  • naturally increase margins and productivity using online banking services

Contact your Nevada State Bank’s business specialist and boost cash flow from order capture to usable capital.

 


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC