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Cash flow is the lifeblood of business and it’s especially important for small businesses who may not have the cash reserves of a large corporate. Making sure your business gets paid for provision of goods or services is paramount. After all starting a business is generally intended to be a profitable venture. It’s hard to plan for every eventuality in life. The last thing you want is to see your business’ liquidity destroyed by one or two unforeseen bills, especially if your products are actually selling. These 3 steps should help improve your cash flow.

1. Incentives

It is well documented about how incentives can help improve your cash flow. Offering percentage discounts off your invoice for early payment is nothing new. In addition other incentives such as an extended period of warranty or extra units included free in the next delivery could also be a tactic your business can use. Bear in mind though that these incentives are likely to impact profit margins. It wouldn’t make sense to improve cash flow at the cost of your profitability. If the impact on margins can be sustained and cash flow needs to be improved this is a tried and trusted method.

2. Timing

Businesses want to get their hands on their revenue as quickly as they possibly can. Therefore the number of days that pass before a client is invoiced following the completion of work is sunk time. If an invoice is not received, do you think a client is going to actively look for it and pay you too? If it takes your business a week to send the details to your most recent customer that week is time where the likelihood of payment is very very low. Organise your invoicing to be completed promptly after each job is completed. This could also play into a recency bias in the customer’s head. They may be inclined to pay up quickly if they are reminded to do so immediately after your work for them is done or their order has arrived, especially if they are really happy with the standard of your product and/or service. If it is left too long to provide them with payment details it may fall down their ever expanding lists of things to do.

3. Payment Processing

Another way to improve your cash flow is by accepting every type of payment possible. In today’s day and age there are ever increasing ways for people to pay. Simply accepting cash or cheques didn’t cut it 5 years ago so they’re not going to cut it today. Cash transactions have been in steady decline over the last number of years. Make sure that you accept credit and debit cards as well as other alternative methods of payment such as Paypal, especially if your business is web based. Your bread and butter is to accept electronic bank transfers. The last thing you want to happen is to have invoiced your client and for them to be ready to pay you, but they can’t because you don’t accept a common payment method. This may even be a deal breaker for return business if there is a major hassle in finalizing the transaction. Make sure your payment processing is up to date, particularly with the introduction of SEPA, and improve your cash flow.

Related: Cash flow guide for small businesses and start ups

Marc O'Dwyer

After completing a Graduate program in Marketing, Marc’s impressive sales career began at Allied Irish Banks, Pitney Bowes and Panasonic where he received numerous Irish and European sales performance awards and consistently exceeded targets and expectations. In 1992, Marc’s entrepreneurial spirit led him to set up his own business, Irish International Sales (IIS). Initially, this company was a reseller for Take 5 Accounts and Payroll software. Within four years, IIS became the largest reseller of Take 5 in Ireland, acquiring four other Take 5 resellers. He also found time to set up two mobile phone shops under the Cellular World brand and a web design company offering website design services for small businesses. In 2001, he bought the majority share in a small Irish software business, Big Red Book. At that time, the company was losing money. The company became profitable within two months, and Marc then acquired a payroll company to compliment Big Red Books Accounting products. In 2003, IIS were appointed as Channel Partners with SAP for their new SME product, SAP Business One. Marc sold his Take 5 business and concentrated on developing this new market for SAP As a result, by 2007, IIS was recognised as the largest Channel Partner for SAP in EMEA (Europe Middle East and Africa). In 2008, the IIS Sales Manager bought the Company from Marc in an MBO. He launched Big red cloud in June 2012, the online version of big red book, to date the company successfully converts 59% of trials into sales and the number of customers is growing rapidly. Marc continues to run both Big Red Book and Big Red Cloud which now support 75,000 businesses. He is a very keen sportsman, having played rugby for 20 years, represented Leinster at under 16 and under 20 levels, and league squash with Fitzwilliam Lawn Tennis Club for 10 years. Marc has competed in 11 Marathons, including the London and Boston Marathons, and has completed several Triathlons and Half Ironman races. He has also completed six Ironman Races in Austria(x2), Frankfurt (Germany), Nice (France) , Mallorca (Spain) and Copenhagen (Denmark)

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