When we talk about business credit and business value, one of the key aspects is to make sure that you get your bills paid on time. This will ensure a few things.
- That you will not get reported negatively to a credit bureau, as this can have a very negative impact on your credit history
- It shows good will – paying your bills on time shows that you’re a company in good standing, and have a healthy financial interaction.
We know running a business can have liquidity issues, and you may have problems managing your bills. Here are some tips on how to assist in managing it.
Use direct debits to a credit card
For the small bills, using a debit on your credit card can be a great way to manage your cost. First of all, you know that the bill has been paid, and that you have till the end of the month to pay off your credit card.
Having this option means you have the flexibility to pay these smaller items off when needed, and it will help you to improve the cashflow of your business.
Know your terms
With your suppliers, know your terms regarding when you need to pay off your bills.
Depending on your supplier, you can often negotiate terms with them as well, to ensure that you get the time you need to pay off your bill.
One convenient method of managing your finances is to schedule your payments. A lot of banking systems provides you with the ability to schedule a payment in the future, meaning you can co-ordinate payments with your cash flow.
If it is looking like you will not be able to make a payment on time for a bill, the best thing is to contact the relevant party and let them know. Quite often this will lead in to an extended dead line, or even a payment schedule if you really need it.
Having this as an alternative is better than leaving the payee in the dark, and the worst case is getting a negative entry on your credit report.
If your debts are building up because of slow paying clients, an option is to use a type of factoring, such as invoice financing. This will provide you funds now, so you can handle your bills and handle your financial management.
There are many ways to defer payments. Sometimes, companies will offer payments over time, and some sort of payment plan. Even though this will come at an expense, what it does is free up finances for you now. So even if you can afford to pay now, you need to ask yourself if it is better to retain the cash to improve the liquidity, or to use the funds in other aspects of your business.
Hopefully, these tips will ensuring that you have the right level of liquidity for your business, and the right money management knowledge and skills to achieve it.