Cash flow is everything: Here’s how to improve yours

Whatever the size of your business or organisation, cash flow is the one part of your strategy that can stop you in your tracks – or guarantee success.

Much of the advice SMEs and other businesses get is extremely is valuable – but sometimes there’s too much that can’t be implemented effectively. Here are three ways to improve your cash flow in a demanding economy.

  1. Conduct customer credit checks

One of the biggest issues accounting staff have to face is non-payment by clients. This directly impacts cash flow and means extra time spent on calling, mailing and following up.

In some instances, a client may have a valid reason for missing payment and your company may want to work out a payment plan until the client gets back on their feet.

Where a client skips payments regularly, it may be time to do another credit check. Your accounts department should be conducting credit checks on all clients before creating their accounts with your company, but over the years their situation may change and it’s best to keep up with their current payment practices.


How to run a credit check in South Africa

There are various online providers of credit checks, and one such is, which enables a business of any size to check on a client’s viability by simply filling in a form.


  1. Offer discounts for early payment

Offering a discount for payment on or before the 2nd of the month can ensure your cash flow looks healthy in time for end-of-month bank interest charges.

While no company wants to take less than their worth, sometimes cutting according to the cloth and making allowances for a touch financial market pays off. Look at what your customer pays on a monthly basis, and see if a percentage “reward” of anything from 1% to 5% for early payment will assist with your cash flow while giving good customers an opportunity to save.


How to implement your client reward

Write a personalised note to the head of the company you would like to approach. Tell them that you’ve selected them as a valued client eligible for a discount for early payment of their accounts. Let them know that your company is offering them a solution to saving them money while you maintain a healthy cash flow. Ultimately it goes back into the economy of the industry you serve.

  1. Choose the best payment option for you and your clients

Millions of payments are made daily by South African citizens and businesses. This is according to the Payments Association of South Africa (PASA). Now, there are a variety of payment choices, ranging from cash to electronic payments. They also include credit/debit cards, debit orders, mobile payments and real-time online internet payments.

The National Payment System (NPS) settles more than R 576 billion every day. Consumers, SMEs and corporates have a choice of about 18 different payment systems, which jointly form part of the NPS. These are governed and regulated by PASA. The South African Reserve Bank (SARB) ultimately settles all payment instructions.

To determine the best payment option to ensure a healthy cash flow, ask yourself these questions:

  • Which payment offering would I find most convenient for my business?
  • How much will each payment system cost my business and my clients?
  • Which system is most likely to maintain my cash flow?
  • What sort of protection does a payment system give me/my clients?

The global payment landscape continues to change the face of banking and the financial sector in South Africa. Companies of all sizes must keep up with changes that can improve their cash flow plus their service to clients.

Save yourself from dipping into your cash flow. Get Working Capital to Fund your Purchase Orders.

Leave a Reply