Cash is the life source of every business—it keeps the system running smoothly. The moment it stops flowing, the entire system can begin to fail. This is why it is essential for you as a produce distributor to keep this important asset flowing as optimally as possible.
Simplifying your payments and collections can help enhance your business’s cash flow. ERP solutions like Silo help produce businesses achieve this. They do this by providing you with payment and reconciliation tools to improve the payment experience.
The following tips can also help you make payments and collections less stressful:
7 Steps to Simplifying Your Produce Business’ Payments and Collection
Here are 7 steps to simplifying your produce business’ payments and collection.
1. Create better invoices
Invoices are essential in every business transaction. In fact, the quality and extensiveness of your invoices can greatly affect your cash flow. Many produce distributors end up having their businesses suffer because of the subpar quality of invoices, which is something you’ll want to avoid.
Let your invoices be as detailed (yet concise) as possible. This ensures that the recipient has all the information needed without being distracted by insignificant details. Include key details, including a summary of what the invoice covers, where the money is being sent, the payment due date, and additional payment methods.
Ensure that the invoice is clear to avoid any confusion or need to ask further questions —this will make it much easier for clients to make timely payments, as it helps them quickly verify that all is as it needs to be.
2. Send your invoices promptly
Help your clients make their payments on time by providing invoices promptly. The longer it takes you to send the invoice, the longer it takes to get paid.
Ensuring your invoice is prepared and sent on time goes a long way in simplifying the payment collection process. Online invoicing services are a great tool here. Some even offer additional features that let you schedule when invoices are sent and allow you to track their progress. This way, you’ll know when exactly your clients receive your invoices and can quickly take action when you notice they have yet to respond to it.
3. Provide a variety of payment options
If your client is unable to make payments, it doesn’t matter how detailed your invoice is or how promptly it is sent. Until a suitable payment option has been found, there is no way for the payment to be made. This is why it is important for you to provide your client with a variety of payment options. This way, the client is more likely to find a suitable option to use.
Look for payment methods that require the least amount of back and forth, with reliability that reduces the likelihood that you’ll have to chase down a payment.
4. Incorporate efficient payment systems
When it comes to bringing ease to the payment process, very few things are as effective as payment systems. Providing a centralized system that allows businesses to manage payments and collections helps bring seamlessness to the payment process.
Payment systems are essentially a one-stop shop for all things payment-related. They help ensure you have the necessary tools for handling your payment-related matters in one place. This covers everything from monitoring transactions and taking necessary actions when needed to storing vital documents when the need arises. They also help keep track of payment methods, making it easy to reconcile them in case of any missing payments.
5. Have a dedicated accounts team
Depending on the size of your produce business, handling finances on your own might be challenging. This could, in turn, reduce the efficiency with which your business handles payments and collections. A dedicated accounts team can help solve this problem and help optimize the payment and collections process.
Consider also equipping them with the right tools, which may involve software programs to streamline parts of their job.
6. Have an open line of communication
There is never truly a bulletproof plan. No matter how well you make your plans, there are always bound to be hiccups every now and then. The same goes for business transactions. Once in a while, your clients would face some type of problem. Keeping an open line of communication helps make sure such issues are resolved as quickly as possible.
These issues could be something as little as the client forgetting the payment’s due date or something as significant as payments being paid into the wrong account. Proper communication is always the first step in solving these issues. An open line of communication helps provide an avenue to hold such conversations. The easier it is to get in touch and have these conversations, the easier it is to resolve issues.
A great ERP system offers communication solutions that allow clients to reach distributors quickly and easily.
7. Have a backup cash flow plan
Let’s face it, there’s still that little chance of things going wrong even if we made the best cash flow plan possible. Sure the point is to reduce the chances of this ever happening, but the fact remains that there will always be risks when dealing with money.
This is why you always want to have a backup plan. Seek other ways to keep your cash flowing. Getting new customers who are ready to do business with you is a great option here. You could also consider getting access to working capital for your produce business through means such as Silo’s capital offerings. This way, should you have problems with your typical collection channel, you’d have something to fall back on.
Payments and collection is crucial to a produce business’ success
For a produce business already dealing with a lot, accounting is no easy task, but it’s all the more important the larger the scope of a business’ operations becomes. Cash flow sustains a business and keeps it running, and simplifying your payments and collections can significantly improve cash flow.
To keep your business afloat, consider and keep in mind these important tips.