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Cash Flow Need Improving?

Clear Vision • Jul 05, 2017

The way cash flow is managed in different businesses varies wildly.  Some do it well, some do it poorly, some spend a lot of time on it, others barely consider it.  But amongst all of these businesses one thing is true:  cash flow is the lifeblood of your business.

At CFO Now and Clear Vision Accounting Group we believe everyone can probably improve their cash flow, not matter how good it is now, and reap the rewards of a more profitable and well run business.

Here are five top tips for improving how your cash flow is managed:

  1. Set the right expectations

Don’t leave it to the first or second invoice to try to set your new client or customers’ expectations.  Get in early and have a frank and clear discussion about your mutual expectations.  Make it clear what your credit and payment terms are and if you do provide some flexibility make sure everyone understands how that works.  No need to be aggressive with your new customer but in the long run everyone will benefit from certainty around invoices and payment.

  1. Get your terms and conditions right

Don’t treat your terms and conditions as just some fineprint or “boilerplate” that no-one every reads and needs to know about.  This is your legal contract with your customer and will become very, very important if you need to enforce the contents.  Make sure you get your terms and conditions checked by a lawyer on a regular basis, the law changes, and as a minimum they should include:

  • How goods/services are to be supplied
  • How your terms are accepted
  • When and how payment must be made
  • What the consequence is for failing to pay on time
  • Personal guarantees, retention of title, disclaimers, warranties and registration of security interests
  1. Make invoices easy to pay!

If you want your invoice to get paid it helps if they are easy to understand, well structured and absolutely accurate.  Anytime your client receives an invoice they don’t understand or one that has an error it reduces their confidence in you and increases the chances that the invoice just won’t get paid promptly.

Timely invoices are also important.  The longer the gap between the service or product received and the invoice the higher the chance your customer will start to undervalue what they have received.  There are a lot of choices now for payment options.  It may not suit your business to offer them all but you need to be flexible and try to provide the options that your customers are looking for.

  1. Be informed

If you have a lot of small debtors it might be impossible to keep across how each of them are doing or to do a credit check on them.  But if you have a smaller number of customers with large individual invoices it might be worth looking into a credit bureau like CreditorWatch so that you can:

  • Access credit reports and credit scores
  • Review historical ASIC data about a business
  • Be notified if a worrying change happens in a client’ credit history such as a court judgement or administration
  1. Fair but firm!

There is a fine line between badgering your customers and efficient, professional credit procedures.  But there is also a fine line between relaxed credit procedures and bankruptcy!

If you’ve set the right expectations your customers shouldn’t be concerned by friendly reminders when an account is close to becoming overdue.  The longer you leave it, the less chance you’ll eventually get paid.

Make sure your credit procedures include a quick phone call to your customer the day after payment falls due.  And also ensure you record any agreements made for extensions of time to pay.

Need help?

If your cash flow and credit management procedures need an overhaul to improve business profitability give Clear Vision a call or consider how the ongoing service CFO Now offers might be what you need to give your business the edge.

Content based on an original article by CCIQ

Embracing the Bright Side: Finding Joy in Everyday Moments

By Caroline Gillies • 07 Mar, 2024
In a world that often feels chaotic and uncertain, it's easy to get caught up in the hustle and bustle of life, forgetting to pause and appreciate the simple joys that surround us. But amidst the challenges and hardships, there is always a glimmer of light waiting to shine through the darkness. Today, let's embark on a journey to explore the uplifting and positive aspects of life, reminding ourselves of the beauty that exists in every moment. Gratitude: A Key to Happiness Gratitude is a powerful tool that can transform even the most mundane of days into something extraordinary. Take a moment each day to reflect on the things you're grateful for, whether it's the warmth of the sun on your face, the laughter of loved ones, or the beauty of nature. By shifting your focus to the blessings in your life, you'll find that joy naturally follows. Embracing Imperfection Life is messy, unpredictable, and imperfect – and that's what makes it beautiful. Instead of striving for perfection, embrace the flaws and quirks that make you unique. Celebrate your successes, no matter how small, and learn from your mistakes with grace and humility. Remember, it's okay to stumble along the way – it's all part of the journey. Finding Joy in the Little Things Happiness doesn't always come from grand gestures or monumental achievements. Often, it's the little things that bring the most joy – a kind word from a stranger, a hug from a friend, or a quiet moment spent watching the sunset. Pay attention to the small moments of beauty and wonder that pepper your day, and you'll find that happiness is never far away. Spreading Kindness and Love In a world that can sometimes feel cold and indifferent, kindness is like a ray of sunshine breaking through the clouds. Make it a priority to spread love and positivity wherever you go, whether it's through a simple act of kindness or a heartfelt compliment. By lifting others up, you'll find that you lift yourself up in the process. Cultivating Inner Peace True happiness comes from within, rooted in a sense of peace and contentment that transcends external circumstances. Take time each day to nourish your mind, body, and spirit – whether through meditation, mindfulness, or simply taking a walk in nature. Cultivate a sense of inner peace that will sustain you through life's ups and downs, allowing you to navigate challenges with grace and resilience. Embrace the Journey Life is a journey filled with twists and turns, highs and lows, but it's also a journey filled with beauty, wonder, and endless possibilities. By embracing the bright side of life, finding joy in everyday moments, and spreading love and kindness wherever we go, we can create a world that is a little brighter, a little kinder, and a little more beautiful for us all. So let's embark on this journey together, with open hearts and open minds, ready to embrace all that life has to offer.

Boosting Your Superannuation: Seven Powerful Strategies

By Caroline Gillies • 22 Feb, 2024
Boosting Your Superannuation: Seven Powerful Strategies

Changes to Company details and ASIC – How to avoid a fee

By Caroline Gillies • 19 Oct, 2023
When it comes to being a Director of a company, there are administrative requirements that must be complied with, including keeping ASIC in the loop. We all hate paying unnecessary fees, and ASIC loves to charge fees. To avoid late fees, ASIC must be told about any changes to company details, including your business or residential address, within 28 days. If your company's information changes, please let us know so we can notify ASIC on your behalf. Example: Jarryd gets a late fee Jarryd recently moved his company to a new storefront. In the rush of changing to his new principal place of business, he forgot to update his address details with ASIC. A month later, Jarryd logged into his online account to change his address to reflect the address of his new principal place of business. Because it was outside the 28 day timeframe, the company was charged a $93 late fee. If he had waited longer and lodged the change of address more than a month late, the company would have been charged a $387 late fee. To avoid fees in the future, Jarryd realises it's important to update his details as soon as they change. In summary, be like Jarryd and realise the importance of advising Clear Vision Accountancy Group of any changes. Example supplied by ASIC
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