Meeting Topic
Credit Management by Bronwyn Gregory
Credit management plays a crucial role in maintaining a healthy cash flow and reducing financial risks for businesses. One effective strategy is to set up your invoice payment terms (due by dates) within a short time frame i.e. due on receipt or 7 days. Could using shorter payment terms and creating a process to manage your debtors make a difference in maintaining your business cash flow?
Why Shorter Payment Terms Work Better Than Longer Terms
Many larger businesses and corporations’ invoice with due dates and payment terms that are the 20th of the month. They in turn manage their debtors in the same way, often requiring invoices to be received and processed within 5-10 working days after the end of the month and making payments on the 20th. These longer timelines can disrupt cash flow for smaller businesses.
NZ Businesses are being encouraged to use shorter payment terms i.e. 7-days ensuring quick payments, promoting a steady cash flow and more predictable revenue. With this structure, businesses reduce the likelihood of late payments and avoid the stress and administration of pursuing overdue accounts. A faster cash cycle also means businesses can pay their debtors on time. Below are some tips for discussion to ensure your cashflow remains steady.
Clear Descriptions and Timely Invoicing
Issue invoices promptly and with accuracy. Delayed invoicing leads to delayed payments, which can destabilise cash flow. The sooner an invoice is sent, the sooner customers can process the payment. Invoices should include clear, detailed descriptions to avoid confusion and disputes. Customers should be able to understand the charges and services they are paying for. It is also important to clarify whether prices are inclusive or exclusive of GST. Transparent communication about pricing helps avoid misunderstandings and builds customer trust.
Transparent Communication: Make Sure Your Customers Understand Your Terms
Establishing clear and open communication with customers is key to fostering strong business relationships. It is essential to discuss payment terms, payment expectations and any additional fees or charges upfront. This ensures both parties agree on the payment schedule from the start. If customers face financial challenges, offering them an open line of communication helping maintain a positive relationship and avoid payment issues.
Build a Valuable Customer Base
Maintaining a successful business requires building a loyal and trustworthy customer base. You can achieve this by implementing best practices such as:
- Being Upfront About Charges: Clearly state all prices, including taxes and additional fees, so customers know exactly what to expect.
- Timely and Accurate Invoicing: Issue invoices promptly with clear descriptions to expedite payments.
- Clear Communication: Make sure customers fully understand your payment terms from the start. Don’t delay addressing any overdue debt, the longer you leave it the harder it gets, and it may be a simple communication error.
- Flexibility in Payment Terms: While using 7-day payment terms, offer flexibility if customers encounter genuine difficulties. This can foster long-term loyalty.
Conclusion Use best business practices to build a good business. If you want to chat, contact Bronwyn @ Synergy in Business for bookkeeping and payroll solutions.
Bronwyn Gregory (Synergy in Business Ltd)
Next Meeting Topic
Maintaining Core Messaging as Your Business Grows by J0 Morris
Business growth is exciting, but as you expand, maintaining consistency in your messaging, values, and communication can become more challenging. Whether you’re bringing on contractors, part-time staff, or full-time employees, ensuring alignment in communication and core beliefs is essential. Here’s how to keep your messaging true to your vision as your business evolves.
Reflect on Your Messaging
As you read on, consider:
- Have you maintained consistency in your business messaging as you’ve grown?
- What challenges have you faced in ensuring employees or contractors align with your values and style?
- What tools or processes have helped integrate new team members effectively?
Clarify Your Mission Statement
Before others can communicate your vision, you must define it clearly for yourself. Even if you currently operate solo, crafting a mission statement will provide clarity as you grow.
Key Elements of a Strong Mission Statement:
- Clarify Your Purpose – Define why your business exists.
- Identify Your Audience – Who do you serve, and how do you help them?
- Highlight Core Values – Establish the principles guiding your work.
- Keep It Concise – A sentence or two that is clear and memorable.
- Make It Action-Oriented – Use strong, active language that reflects your goals.
A well-crafted mission statement acts as a foundation, ensuring that anyone joining your business understands its core purpose and direction.
Establish Clear Business Practices
As your team expands, having structured business practices is key to maintaining efficiency and professionalism. Without clear guidelines, new team members may struggle to align with your expectations.
How to Develop Effective Business Guidelines:
- Align with Core Values – Ensure all processes reflect your company’s principles.
- Set Clear Expectations – Define roles, responsibilities, and standards of conduct.
- Be Practical – Use simple, direct language and real-world examples.
- Focus on Key Policies – Address workplace conduct, customer service, and compliance.
- Make It Accessible – Ensure guidelines are easy to find and reinforce them through training.
Providing clear expectations helps create a smoother workflow, reduces misunderstandings, and ensures that employees and contractors represent your business effectively.
Standardise Business Communication
Clear and professional communication is critical to maintaining a strong brand identity. Have you set expectations for how employees should interact with clients? Do they understand when to be formal or conversational?
Creating Effective Communication Guidelines:
- Define the Purpose – Explain why communication consistency matters.
- Be Clear & Concise – Use straightforward language and bullet points.
- Structure Logically – Separate internal, client-facing, and external communication.
- Set Expectations – Define appropriate tone, language, and responsiveness.
- Provide Examples – Use real-world scenarios to illustrate best practices.
Inconsistent or unclear communication can lead to unhappy clients. A well-trained team ensures smooth, professional interactions that strengthen your brand.
Keep Your Core Messaging Strong
By establishing clear messaging, structured business practices, and consistent communication guidelines, your business can grow without losing what makes it unique. Keeping everyone on the same page ensures your core values remain intact, no matter how large your team becomes.
