If you’re awake at night worrying about cashflow while your customers are comfortably paying you weeks or months later, I’ve got some tough news…
You’re funding their business instead of your own. You’ve become their accidental banker.
Every day I see hardworking business owners acting like a bank without ever agreeing to the job. They’re trying to pay wages, suppliers, super, GST and tax on time, while giving customers 30, 60 or even 90 days to pay. That’s not good customer service. That’s using your cash to finance someone else’s business.
And yes, this includes government departments and large organisations. Just because they have deep pockets doesn’t mean you should carry the financial burden. Long payment terms may be unavoidable in some contracts, but they should never catch you by surprise. They need to be factored into your pricing, your cashflow forecast and your funding requirements.
If you’re constantly chasing money, the problem usually started long before the invoice became overdue.
Invoice immediately. Ask for deposits before work begins. Use progress claims on larger jobs. Make paying easy with online payment links or direct debit. Assign someone in your business to review outstanding debtors every single week and contact customers before accounts become overdue. A consistent system will always outperform desperate debt collection.
Remember this golden rule: An invoice isn’t finished when you send it. It’s finished when the money reaches your bank account. So, stop measuring success by invoices sent. Measure it by cash received.
Financially unshakeable businesses don’t just focus on winning customers. They focus on getting paid.
This week’s challenge: Open your aged receivables report and assign one person to contact every customer with an invoice more than 30 days overdue. If an invoice is more than 45 days overdue and the customer hasn’t committed to a payment arrangement, stop chasing it yourself and engage a debt collector.