Good cashflow is important for most businesses but can be crucial to the success of plumbing, electrical, HVAC and other trade services businesses. Here are some tips to ease the stress on your operation and get better cashflow in your business.
Invoice ASAP
One of the easiest ways to get in trouble is holding up your invoicing process. Make it part of your daily routine to review what jobs have been completed or at a stage where they can be invoiced. The sooner the client has an invoice for services supplied, the sooner your business can receive payments.
Request Deposits
If you run a service base business, encourage clients to make a percentage deposit on the services they have requested. Even if it is a small percentage it will assist with meeting critical requirements like paying staff, suppliers, and will also lock a client into going forward with the projects they have booked.
Offer Direct Debit & Credit Card Payments
Most clients will have experience either paying by credit card or having a direct debit agreement for services. If you have this in place for your business, it makes it easier for clients to make payment on time and also improves your cashflow.
Set Reminder Triggers
Most cloud accounting and job management software now offer automated reminders that can be set to go out to clients when a payment date is coming up, is due for payment or is overdue. It is usually a free feature and is another way to improve the chance of getting paid on time.
Use Payment Plans
Your cashflow will be significantly affected if you have a large commitment for materials, tools, or other job-related expenses. Before you pay up front, look into the possibility of organising a payment plan. This can ease the stress on your cashflow and also avoid heavy interest or penalty fees if organised in advance.
Shop Around for Materials
These days there are a number of suppliers to chose from for building materials. When ordering your materials, shop around to see if there is a possibility to get a better deal on payment terms or discount rates.
Use Debtor Funding
If you have a large project or are finding it difficult to manage cashflow for a large number of outstanding amounts, debtor funding could be a good option to help your cashflow. Debtor funding may affect your profit margins, but is offset with the peace of mind that you will get your money upfront and the burden of chasing up outstanding payments is left with the Debtor Funding service.
Improve Tax Management
All businesses will have a responsibility to pay some form of tax relating to the business or its employees. However, there are a number of options to plan the payment of your tax liabilities either through budgeting or organising payment plans. Managing this effectively will keep the stress of dealing with the ATO off your back and also avoid possible fees and interest charges.
Outsource Tasks
With today’s technology, there are a number of ways to get a better deal for your business by outsourcing some tasks. Why rely on one full time staff member with limited skill sets when you can stack together a range of cost-effective services provided by professionals that are qualified in the required. If the idea of overseas staff is not appealing, there are plenty of local outsourcing companies that are made up of local staff providing specialised services to a range of clients like you.
Many business owners will feel street on their cashflow at some stage of their business journey. Putting good systems in place to encourage better cashflow will only improve the chances of success in your business.
If you have any questions on improving your cashflow, call us on 1300 446 956 or fill in your details here and we will contact you.
