Every IT consulting firm needs smooth cash flow. Key to this is making sure your clients pay on time.
By following the tips in this article, you can minimize late payments, as well as the business issues and stress that they can cause.
Use the Right Software
While using Microsoft Word or Microsoft Excel to create invoices may seem cheap and simple, it is not a good way to keep track of your company’s finances.
Using a dedicated finance or invoicing package helps you to keep track of your invoices and payment histories. You need software that can prompt you when invoice payments need chasing and provide you with valuable information on payment trends.
Consider a Prompt Payment Discount
Offering a small discount for fast payment (for example, within 5-10 days) is a good way to establish consistent cash flow. While offering a discount of 5% or so may seem generous, the benefit of knowing you will be consistently paid on time can be worth this small sacrifice.
Insist on Deposits
If your IT consulting firm undertakes large projects, consider demanding a 50% deposit at the time of project initiation. This ensures that you have some cash-in-hand and is a wise credit strategy when dealing with new customers.
Ensure Your IT Consulting Firm's Invoices are Clear
When your IT consulting firm bills customers, make sure that invoices are completely clear and well detailed. This reduces the potential for invoicing disputes.
Befriend Financial Directors
Find out who is responsible for processing payments at each of your customer sites and make sure that you cultivate a good relationship with them. That way, when you phone to chase payments, you can be sure of a helpful and sympathetic ear.
How do you make sure that your IT consulting firm gets paid on time? Share your strategies in the comments box below.
And to follow-through on the tips introduced in this short post, be sure to watch the recording of Inbound Revenue Acceleration Webinar for Managed Services & IT Consulting.
Creative Commons Image Source: flickr Jayson Ignacio
Topics:- Computer Consulting Business