Getting Paid: 8 Ways to Ensure a Strong Cashflow

Do you find it difficult to secure payments from customers or businesses? Do you want to improve your cash flow? By being proactive and smart about the way you do business, you can make sure you are getting paid right and on time for the hard work that you do.

Here are some tips to improve your cashflow and payment security.

Create Clear Contracts

Make sure you have a clearly defined contract for the work that you do. Whether you’re building a house, carrying out a renovation, or doing bigger work for a commercial client, you need to have a written agreement that works for you, not against you. MPAQ has plumbing-specific contracts that have been created with plumbers in mind and have undergone extensive industry consultation and testing to make sure they are suited for Queensland plumbers.

Purchase Contracts

Invoice Smartly

Create well-structured invoices that outline all the necessary information about how much needs to be paid and where this should be paid. This is especially important when trying to get payments from businesses. Your invoice should include: a clear description of the work (including dates), itemised costs (GST, gross fee, and net fee all shown individually), payment terms (due dates, progress payments, and late payment fees), payment methods, and your ABN and contact details.

Invoice Promptly

The sooner your invoices go out, the sooner you’ll be paid. Instead of processing invoices weekly or monthly, try to process them upon completion of the job. Accounting software such as Xero can make this easier for you.

Reconsider Due Dates

Cash flow is critical. Did you set your terms to 30 days because it seemed to be the norm? You can start with 14 days and when a client is late to pay, you can start chasing it up long before a month has passed.

Financial Incentives

Early payment incentives can be more encouraging than late payment penalties. Even a two percent discount can be a motivator, and it is money in the bank for you, which keeps your cash flow healthy. On a $5,000 invoice, that’s just $100. Is $100 worth not having to chase up payment? State this incentive clearly on your invoice so that it won’t go unnoticed.

Get Help for Your Accounts

Sometimes, cashflow is not just about the money that goes in; it’s also about how the money is getting moved around. If you find bookkeeping overwhelms you, even with the digital platforms that make it much easier to stay on top of things, seek help from a professional. Hire a proper bookkeeper or accounting manager—even on a contract basis. Proper financial advice and strategy can go a long way, even if you are just a small business.

Offer Multiple Payment Options

Option is king when taking payments. Providing clients with various payment methods can make it convenient for them to settle their accounts. While EFTPOS payments are now so much easier to make available, you can explore more options such as electronic bank transfers, online payment platforms, or buy now pay later solutions.

Debt Recovery

When worse comes to worst, you might have to send a letter of demand to collect unpaid dues. You have legal and consumer law obligations when contacting other businesses about debt, so if you are unsure, you can ask a legal professional to draft one for you.

As an MPAQ member, you have access to free debt recovery letters and services from our partners, Cornwalls and Helix Legal. Click below to find out more about these member benefits.

Cornwalls

Helix Legal