When it comes to starting and growing your business, cash flow is king. There's a golden rule in business: No matter how much you sell, if you don't collect the money, you're going out of business. Even successful entrepreneurs get so wrapped up in selling that they forget to take the time to ensure good cash flow and timely payment for those sales. When you’re talking about return on investment (time and money), it’s easy to focus only on total sales. Sure, selling is important but getting paid on time for what you do can make or break a new venture.

There are many things that influence how quickly your invoices get paid. Experts say that as many as one-third of all invoices in the EU remain unpaid. And many more are at least 30 days late. Those are astounding numbers.

There are no sure ways to make certain you get paid.  Good customer relations and a little knowledge of human nature can go a long way in making your cash flow nightmares a thing of the past.

KNOW YOUR CUSTOMER

Often, it’s all about two things: the amount of money involved and the financial health of the customer. That’s why it’s extremely important to take on clients who you know have the ability to pay. Do a background check, especially on big orders. Call around. Ask questions. Seek out others in your industry and make sure you find out what they’re saying ‘on the street.’ Knowledge is power and knowing your client will make things easier down the road.

Once you feel comfortable with the status of your client, work hard to develop a good relationship. Frequent interaction and regular updates make for good relations. In the end, business is both a very human pursuit.

EASY TO UNDERSTAND INVOICES

Business is not really about nuance. Clients, and their trusted pay clerks, need clear, simple invoices.  A nice red stamp with the word “Invoice” across the top of a bill is sure to get attention. Be straightforward about the job number and product delivered or services rendered, amount due, the date to be paid and methods of payment.

Be specific about a due date. Don’t write ‘pay before May 20th ’ Write, instead, ‘Pay May 20th.’ This removes the confusion of choice from the equation.

And it is a good idea to reward early, prompt payers. One well-known entrepreneur started off by offering five percent off if 100% payment was made upfront. Dangle the carrot. Enticements like, ‘Take 4% off if paid by August 2nd,’ often work. Everyone wants a deal. Give your clients a break and they may just reward you with timely payments.

Remember, it’s also human nature to pay lesser amounts first. No one wants to face into a major bill all at once. Smaller invoices get paid quicker. Implement a fair payment plan that benefits your bottom line and doesn’t leave you hurting for cash. Negotiate terms and conditions that require payments when you want, and need, them. Profitable cash flow follows when you build steps (i.e. smaller invoices!) into your agreement.