If you sell goods you have a supply chain in one form or another, it’s likely that you’re acquiring goods on credit and paying for them when the sale is made. This means you’ll be staring down receivable invoices from said suppliers on a routine basis.
But, guess what? Your supplier doesn’t have a business if you don’t. So, it’s helpful to bear that in mind when working with suppliers. This doesn’t mean ignoring invoice due dates (that’s likely to backfire, badly) but it is likely to change your perspective when negotiating terms.
Getting paid first and foremost is really an exercise in timing, making sure you structure a payment schedule that works for you and your suppliers, as well as all other creditors.
Let’s take a look at what that means.
1. Create an excel spreadsheet to keep track of it all
One great way to make sure you’re billing is in order, and that you’re not getting paid last in the pecking order, is to create an excel spreadsheet to track accounts payable and receivable. Then, input everything coming and going out. Once you have the spreadsheet, the real fun begins.
We know what you’re thinking: “but wait, my accountant keeps track of all that for me.” Right. But one of the biggest and hardest lessons to learn about cashflow is that, to effectively manage it, you have to keep a finger on its pulse. It’s as simple as that. Your accountant will understand.
2. Make a few (mildly unpleasant) calls
If you uncover any gaps between bills you owe and the settlement of incoming payments, it’s time to rethink the whole process. And the side of the equation that may need changing is when you pay your suppliers.
They won’t be looking forward to the call but you are ultimately their customer, and they’d like to keep it that way. So, keep it cool, be nice, tell them as much or as little about your reasoning as you’d like, but talk to them about moving your payment due date until your own income has settled. They’ll understand – they may even know exactly what you’re going through.
3. Work with a bank that offers same day settlement
This is, you know, the twenty-first century and all. So why work with a bank that’s not sufficiently connected (in every sense of the word) to be able to provide same day settlement of credit card and other electronic transactions. In this wonderful technological age, if you’re not getting same day settlement service 365 days a year, including holidays, then you’re not getting the kind of service you deserve
How does your bank measure up? Are you getting same day settlement? If not, ask yourself “what am I waiting for?” Find a bank that’ll pay you, first and foremost.
Next… Get smart and sell more.
The most effective people in business are the ones who keep learning and adapting. In fact, the greatest lesson in business is to never stop learning. And, at Anthill, this is exactly what makes us tick. One of the surest ways to improve cashflow is to improve profitability. And that often means, sell more products and services, for a greater margin, at a lesser fixed cost.
[notice]An ANZ Small Business Specialist can assist you with every aspect of your business finances, including managing your cash flow, applying for a business loan, consolidating your banking and streamlining your accounts. If you would like to find out how you can grow your business through finance please go to www.twobillion.anz.com to find out more.[/notice]
Any advice does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you. ANZ recommends you read the Terms and Conditions and the Financial Services Guide (PDF 104kB) before acquiring the product.