Running a small business in what we assumed would be a post-COVID world this year has turned out to be a continuous challenge, taking on various strains from last year’s pandemic. A common denominator for many small business owners is steady cashflow throughout the year.

Staying in the green has always been a priority for small business owners. Now, more than ever, you need to take control and manage your finances to ensure long-term growth and sustainability.

 

To make the most of 2021, here are seven ways you can increase your cashflow and profits:

1. Evaluate supplier and service provider contracts

Consider re-negotiating payment terms or discounts when contracts come up for renewal with long-term vendors. Also, go through the contract to ensure you’re not paying for any services or extras you don’t need.

You should also review your payment terms. If your credit terms are 60 days, rather keep the money in an interest-bearing account than pay early. Don’t be late with payments either as this harms your relationship with vendors who may no longer give you credit. You may also be asked to pay interest.

 

2. Cut costs

Always look for opportunities to reduce wastage and inefficiency, whether that means moving out of your plush offices or cutting back on printing costs. Today, almost everything can be done remotely and online.

 

3. Reward prompt payment, chase outstanding debts

You should have a credit control process that focuses on ensuring your debtors pay on time. Send invoices to customers promptly, and chase overdue bills. Be clear about your payment terms. Incentivise clients to pay on time with discounts for early settlement and penalties for late payment.

Take control of the cash coming in. Many small businesses wait for a corporate client to pay them after they’ve dedicated most of their team’s hours for the month and settled third-party supplier bills. As a small business, it’s reasonable to ask for a 50% deposit upfront for jobs that could affect your cashflow.

 

4. Consider invoice factoring

Invoice factoring supports cashflow of smaller businesses that struggle to offer their customers credit terms of 30 days and more. It’s basically a form of credit where a third-party financier pays you an advance based on an agreed percentage of each invoice you issue. As you receive the money, you pay back the advance and a modest fee.

 

5. Introduce subscription sales

Do you sell a service or product people buy and use several times a year? You might be able to sell it as a monthly subscription. For example, rather than charging customers each time they need a pool or garden service, you could put them on a monthly contract. They benefit from predictable costs, and you get cashflow each month while securing their business for the year.

 

6. Speed up delivery

If you get paid cash-on-delivery, look at ways to speed up production and delivery. For example, a new courier company might be able to ship your goods faster than your existing one. This might also cut your expenses if you find that the new supplier has better rates.

 

7. Get paid sooner

With a wide array of payment options available in South Africa today, consumers have become accustomed to using their preferred method when presented with a bill to settle. For this reason, it is highly beneficial to present as many payment options as possible on your biling document. Choose a single supplier that can provide multiple payment options at competitive prices instead of entering into complex agreements with numerous service providers.

About Netcash

Established in 2003, Netcash is a payment solutions provider delivering debit orders, salary and creditor payments, Pay Now, eCommerce, and risk report services to South African businesses and organisations. The company provides multiple innovative and integrated online payment solutions that are efficient, simple, and cost efficient. Netcash is registered with the FSCA, PASA and is PCI DSS Level 1 compliant.

www.netcash.co.za

Bank EFT (electronic funds transfer) is a widely used and convenient way to get paid, but it has been the target of fraudsters for some time now. South Africa particularly, (recent Bank EFT fraud cases) has seen criminals intercepting emails from businesses and inserting their own banking details to receive payment. Once the money is transferred into the fraudulent account, it becomes very difficult to track. Despite FICA requirements enforced by banks, there is often very little chance of ever recovering the money.  

This creates a great risk for businesses who prefer payment via Bank EFT, however there is a  way to mitigate this risk. Bank details provided in emails shouldn’t be accepted at face value, but verified before making a transfer.

Earlier this year, Netcash revealed an enhancement in their Bank EFT payment service available to their account holders; every Netcash account is now linked to a dedicated Mercantile Bank account. This account number can now be verified online in order for payments to be made with confidence. 

How do your customers verify your bank details?

To ensure that your customers have the correct banking information they need to verify the details they’ve been sent. The traditional way to verify bank details is to request a cancelled cheque or obtain a stamped account confirmation letter from the bank. Netcash has made this account verification process simpler and more convenient for their customers. 

Netcash account holders are able to email bank account confirmation letters from their online account directly to their customers. The letter confirms the Mercantile Bank account details and directs the customer to the Tools page on the Netcash website for verification. By inserting the account number and reference number provided, Netcash will verify the bank account details.

About Netcash

Established in 2003, Netcash is a payment solutions provider delivering debit orders, salary and creditor payments, Pay Now, eCommerce, and risk report services to South African businesses and organisations. The company provides multiple innovative and integrated online payment solutions that are efficient, simple, and cost efficient. Netcash is registered with the FSCA, PASA and is PCI DSS Level 1 compliant.

www.netcash.co.za

Connected Services is a buzzword in the industry at present, though many still grapple to understand just how important it will become. Charles Pittaway, Managing Director of Netcash, says any business or personal solution simply cannot afford to operate in isolation. “In order for software, handheld devices and hardware to offer something of real value, they will have to be developed to interact with one another.”

In the face of the information explosion that is changing the way that we communicate at core level, it is necessary to take a step back and investigate where it all started. When Alexander Graham Bell invented the telephone in 1876, it was initially intended as a voice communication tool. The realisation that the telephone was able to transfer data set the wheel in motion for the evolution into the telex and faxing sphere. The connection of the humble telephone into cellular networks ultimately formed the foundation for the internet, which was the big game changer,” explains Pittaway.

We now had the ability to transfer information and data across multiple platforms, which has had a tremendous influence on how we do business, says Pittaway. “An example is internet banking, which essentially allows two different banking systems to connect in order to perform a transaction. The user then receives a notification via SMS or e-mail, which brings two additional platforms into the equation, beautifully illustrating the concept of connected services.”

The question however remains regarding what further evolution may be on the cards for connected services and the ramifications it may have. Pittaway says that there are currently two very different schools of thought in play. “The advent of the cloud led to the creation of Software as a Service (SaaS), which essentially allows users to utilise software such as accounting and payroll solutions through the web on a pay per use basis. The traditional business model is however application based, where the software is downloaded onto a personal computer and utilised from your desktop or laptop.”

“I foresee these two schools of thought merging in the next five to ten years into hybrid solutions,” says Pittaway. “In order to evolve into true connected services, both online and offline solutions will need to change its platforms to allow inter-changeable communication to take place.”

“The international business economy was non-existent 20 – 30 years ago. Countries were isolated and restricted to trade within its own borders. It has since developed into a global economy that is interlinked: Whatever happens somewhere in the world has a knock-on effect elsewhere. If you bring that same analogy back to connected services, then hardware, the internet and software has given rise to a global economy of technology. All the different vendors cannot operate in isolation and truly successful vendors and service providers will be the companies that get that right,” explains Pittaway.

Inter-operability is already well on its way to becoming the next buzzword, paving the way for strategic alliances and agreements that will allow every application or software solution to be accessible from any device. “Business Intelligence (BI) will become a key aspect in the process of collating all the available information in such a way that it will assist users to make intelligent decisions about their business. Imagine if you had your order system, warehouse, banking, accounting, distribution and every other aspect you can think of, connected with one click of a button? The vendors that can ultimately get all the links in the chain connected, will be king,” says Pittaway.

Connected Services allows for transactions to be owned by various vendors, whether it is a banking system, order system, e-mail or SMS. “It is ultimately not about the number of systems to be linked in a supply chain, but how these systems interact to automate a total solution,” concludes Pittaway.

About Netcash

Established in 2003, Netcash is a payment solutions provider delivering debit orders, salary and creditor payments, Pay Now, eCommerce, and risk report services to South African businesses and organisations. The company provides multiple innovative and integrated online payment solutions that are efficient, simple, and cost efficient. Netcash is registered with the FSCA, PASA and is PCI DSS Level 1 compliant.

www.netcash.co.za