The liquidity of your business forms the basis for a healthy financial situation. Therefore, it is also important to optimize liquidity management. This starts with improving accounts receivable management, which is very important for your company’s cash flow. How to improve liquidity is the question, to which the answer is actually simple. To improve liquidity, there are six simple steps to follow. By applying these steps, you ensure optimal liquidity management for your company.
1. Determine an appropriate payment term
Firstly, it is important to apply an appropriate payment term when sending invoices. Most companies use a term of thirty days in this regard. By setting an appropriate payment term, you gain more certainty that the invoice will be paid within this period.
2. Send invoices promptly
Why wait weeks to send an invoice after a job is completed? It is wise to send an invoice as soon as possible. If you wait too long, the payment will come in much later, which negatively affects cash flow. Liquidity improves when payments are received more quickly into the business account.
3. Clearly communicate the payment term
It is also important to clearly communicate the payment term. If there is any ambiguity, there is a chance that the debtor will delay the invoice. It is therefore advisable to include the payment term in the general terms and conditions or in the agreement and, of course, to mention it on the invoice. If the customer is certain about the invoice’s payment date, it is easier for the debtor to act on it more quickly.
4. Make it easy to pay
Convenience serves people, but also businesses, so it is useful to make it easy for debtors to pay. This can be done by offering multiple payment methods from which the customer can choose. It is also practical to provide the debtor with the option of digital payment of the invoice. This contributes to faster payment. Payt offers many possibilities in terms of payment methods and digital payment of an invoice.
5. Communicate well about outstanding invoices
Invoices for which the payment term has expired require action. If you use Payt, you have direct insight into the outstanding invoices. Moreover, the software provides the option to automatically send reminders after the payment term has expired. In this regard, direct communication with the customer is possible, which also contributes to faster payment, which is obviously good for the liquidity position.
6. Finance outstanding invoices
The liquidity of your company can be further improved by financing outstanding invoices. Payt offers this option through our partner Floryn. Direct payment then takes place for a fee in the form of a percentage of the invoice amount.
Want to learn more about liquidity? Read more here: ‘What is liquidity?‘.
