As we mentioned in our previous blog, What your Cash Conversion Cycle score means, a negative cash cycle score is the dream but for most businesses it’s just not realistic. There are ways however to keep your score as low as possible allowing you quicker access to working capital to grow and improve your business.
When sending invoices to your customers, make it as easy as possible for them to pay. Make sure to include your bank details, alternative ways to pay, and contact details in case any issues need to be resolved. These might seem like obvious things but we see many invoices get held up for these small problems.
Sadly it’s a frequent issue in business that payments fall beyond their due date. Actively chasing your debtors is often needed to get them to send their overdue payments through. Usually, all the buyer needs is a polite reminder. It’s estimated that SMEs spend over 900,000 hours a day chasing payments and outsourcing your credit control can give you back a lot of time and effort that you can be focusing on your business and gaining new customers.
One way to guarantee payment is to not do any work until you get paid. This means you’ll never find yourself in the situation of completing a large order but then not getting paid. But you need to be careful here. Don’t shoot yourself in the foot by losing one of your selling points. Buyers may choose to use one of your rivals that offers payment terms. Our client The Chef’s Patisserie found that offering longer payments terms gave them the competitive advantage to gain more and larger deals and clients.
It is possible to offer your buyers incentives for quick payment. You can give them a percentage discount if they pay within an agreed time frame for example. This is often a good idea and many businesses will put your payments as a priority for fear of losing that discount. It’s important to stay on top of who you’re giving discounts to however and not let anyone take advantage. If you chase a buyer because of a late payment and offer a discount to ensure they pay, they might purposefully pay late next time to get that discount again.
Many businesses don’t have the time, resources, or inclination to keep all of these payment practices up. Instead of juggling all of these tasks to get paid sooner, you could be investing that time and effort into your business.
Invoice finance can give you the cash tied up in your invoice as soon as you send it to your buyer. No more waiting 30, 60 or 90 days and no more chasing late payments either.
Products available range from Full factoring where our dedicated team of credit controllers take all of the stress and hassle chasing payments, to Confidential discounting where your customers won’t even know you’re using the service.
Now that you’re taking steps to reduce your Cash Conversion Cycle score, lets explore some of the Benefits Of Knowing Your Cash Conversion Cycle Score.
Read more on our Cash Conversion Cycle series 1. How to calculate your Cash Conversion Cycle score 2. What your Cash Conversion Cycle score means 3. How to shorten your Cash Conversion Cycle 4. Benefits Of Knowing Your Cash Conversion Cycle score
At Optimum Finance, we utilise innovative technology to offer a range of flexible funding solutions, which grow alongside your business. Get an instant estimate for the amount of funding you could access with our finance calculator. Products include invoice discounting and factoring that can boost your cashflow and give you access to a dedicated credit control team.
Email or call us to speak to our experienced team of experts and find out how invoice finance could help your business. We pride ourselves on getting things done quickly and providing access to cash within 24 hours of approval. We are passionate about finding solutions and delivering to clients’ needs.