The liquidity of your business is the foundation of a healthy financial position. That’s why it’s crucial to optimise your accounts receivable management. This begins with strengthening your accounts receivable process — a key driver of your company’s cash flow.
Wondering how to improve your liquidity? The answer is surprisingly straightforward. By following six simple steps, you’ll set up an effective strategy for maintaining a strong liquidity position.
1. Set an appropriate payment term
Start by defining a reasonable payment term when issuing invoices. Most businesses apply a term of thirty days. By clearly setting expectations, you increase the likelihood of being paid on time, improving your incoming cash flow.
2. Send invoices without delay
Why wait weeks to send an invoice once a job is completed? Prompt invoicing helps ensure faster payments, keeping your cash flow healthy. Delays in sending invoices inevitably lead to delays in receiving payments — which can weaken your liquidity.
3. Clearly communicate payment terms
Ambiguity around payment terms can lead to delays. Always communicate payment deadlines clearly — not just on the invoice itself, but also in your general terms and client agreements. When the due date is unambiguous, your customer is more likely to pay on time.
4. Make payments easy
The easier you make it for clients to pay, the faster you’ll receive payment. Offer a variety of payment options and ensure digital payment is possible. With Payt, you can enable fast and simple digital payments — which significantly reduces time-to-payment.
5. Maintain strong communication around outstanding invoices
Once a payment term expires, follow-up is key. Payt gives you full visibility into outstanding invoices and allows for automated reminders to be sent after the due date. You can also engage in direct communication with the customer — all of which supports faster payment and strengthens your cash position.
6. Finance outstanding invoices
Looking to further boost your liquidity? Consider invoice financing. Through our partner Floryn, Payt offers the option to finance outstanding invoices — giving you access to immediate cash, in exchange for a small percentage of the invoice amount.
