Category Archives: Collecting customer fees

31 Day Cash Flow Challenge Day #26 – Understand the impact of payment cycles on your business

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Ezypay’s 31 Day Cash Flow Challenge

Understand the impact of payment cycles on your business

Guest blogger –  Rohen Burton, Chief Financial Officer, Fit n Fast

Cash flow projections are most commonly prepared monthly, however not all payment cycles are monthly. For example:

  • Billing might be weekly or fortnightly
  • Wages can be fortnightly and or monthly
  • Rent is usually paid a couple of days in advance
  • You may have quarterly charges

Even if you are projecting a profitable month the timing of payments, at different times during the month, may result in a cash outflow that you will need to cover.

Consider setting up an overdraft facility with the bank for these situations.

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31 Day Cash Flow Challenge – Day #25 – Make someone responsible for debt recovery

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Make someone responsible for debt recovery

Guest blogger  – Rowan Brown, Director, Recovery Partners

Debt recovery needs to be a priority in your business.  If you as the owner are too busy to do this yourself then you need to make someone else responsible for it.  And make sure they know they are responsible for it and it is their priority!

31 Day Cash Flow Challenge Day #16 – Don’t forget about Pro-rata Payments

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Ezypay’s 31 Day Cash Flow ChallengeGuest Blogger – Amanda Bracks – Bracks Consulting - Women in Fitness

There are many businesses that are currently not taking pro rata. They go through all the hard work of negotiating with the prospect on a sale price, the sale is accepted and then the business discounts the customer’s fee when they are actually processing the payment details. The customer never asked for this to be removed and it’s a lost opportunity of income.

Pro rata is the amount of money owed before the next debit is due. Many sales people seem to waive the pro rata, thinking the payments can simply start on the next debit. It is very important to the business to retrieve all funds owed for the purchase including the amount owed before the first debit is due.

Working out the pro rata is simple. Just divide the debit amount to get a daily amount. Eg if your services are $89 a month x 12 months and divided by 365 days = $2.93 per day. If someone had 10 days before their debit is due, they owe $29.25 to get started (plus relevant joining / admin fees). If you sell 100 units per month and your pro rata is roughly $29.25 on average – that’s $35,100 extra income per year (money your staff are giving away now for no reason).

Ensure your staff are disciplined to collect the pro rata on every unit sold, either at point of sale or to be debited out of their account on their first debit.

Follow the 31 day Cash Flow Challenge here and on Facebook.

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31 Day Cash Flow Challenge Day #10 – Are you addicted to Lump Sum revenue?

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Are you addicted to lump sum revenue?

Are you addicted to lump sum revenue? – Guest blogger Justin Tamsett – Active Management

By definition an addict is someone who is abnormally tolerant to and dependent on something that is psychologically or physically habit-forming. It may even be an abnormally high craving. For many health club owners and personal trainers they become addicted to cash!

Pre-paid memberships and multi-pack PT sessions are cocaine for a fitness business. You get a massive high as you watch the cash come in. And you become addicted to this cash, as your spending more often than not reflects the amount of cash you have. So to top up the bank account, you run another offer to gain more cash. The more you get the more you spend the more you need more! Sounds like a drug.

For long term sustainability in business we need cash flow and not cash injections. Grow your weekly, fortnightly or monthly direct debits with a strategic plan and you will not require injections. Remain disciplined and focused by setting daily, weekly and monthly targets to hit in regard to debit growth. If you want to improve any number in business (in this example we are talking direct debits), you need to know what that number currently is and what you want to get it to. Then every decision you make in business, ask yourself “Will they help or hinder me changing my debit number?” If it is the latter re-think the decision. And of course, when you do shift the number positively, celebrate your success, as we do with all goal setting.

Follow the 31 day Cash Flow Challenge here and on Facebook.

 

31 Day Cash Flow Challenge Day #6 – Keep stock levels to a minimum

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Keep stock levels to a minimum

Keep stock levels to a minimum

Holding stock in your business is like having cash sitting on your shelves.  You need to constantly monitor stock levels and ensure that you don’t hold any excess or out dated stock.  You may be able to ask your suppliers if you can have the stock without paying for it until it sells.   So you either sell the product or you return it often known as a consignment sale.

 

Follow the 31 day Cash Flow Challenge here and on Facebook.