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5 steps to healthy cash flow for you and your clients

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedNov 20203 min read

In the UK, the average professional services firm is owed £54k in outstanding payments and two out of three small businesses have cash reserves for just three months.

Poor cash flow and late payment are responsible for 50, 000 small businesses closing each year – not only affecting your firm but also your SMB clients. As a result more and more SMB owners are turning to their accountants for advice, and firms and offering new services to meet this demand (74% of firms now offer some form of business advisory service).

For accountants, getting to grips with cash flow allows you to lead by example and become a trusted adviser to your clients. And by solving the cash flow challenges your clients are facing, you free up time that can then be spent on higher value work.

In this guide, we take you through 5 steps to healthy cash flow for you and your clients.

1) Make the most out of cloud accounting

According to our Accountants Benchmarking Survey, while accountants are adopting the cloud well, only 50% said they have clients using online accounting.

As a user of cloud software, you’re best placed to share the benefits of managing finances in the cloud, for example, having a real time view of numbers and reporting and an easy to access view of your cash position.

Explain these benefits to your clients and explore the additional benefits of the wider cloud ecosystem. There is a wide range of fintech and integrated cash flow apps that you and your clients can benefit from.

Here are some good places to start:

Receipt Bank and Auto Entry for data entry and bookkeeping.
GoCardless for Direct Debit.
Chaser or Fluidly for debtor tracking and credit control.

"When I’m talking to clients about payment and cash flow, I’ll usually talk about using GoCardless and Chaser together, with GoCardless making sure payments come through more predictably and Chaser automatically chasing up any possible debt. Chaser emails the customer with a link to the payment button in Xero, which has all the GoCardless payment information. It's the benefit of having cash in the bank quicker that’s the real decider.” Sharon Pocock, Founder, Kinder Pocock

2) Review pricing

In order to help your clients improve their cash flow position, it’s important to review how they generate their income in the first place.

Work closely with your clients to:

Identify efficiencies and look at whether or not there are ways to generate larger revenues while incurring fewer costs. For example, by reducing operational costs or reviewing the size of the product range.
Review their fee structure and make sure it is transparent. This way, the client’s customer will understand what the expectations are when it comes to payment.
Review their pricing model to ensure pricing remains competitive while generating enough of a profit margin to maintain cash flow and good profits.

3) Make it easier to get paid

Making the payments process easier will speed up the time it takes your client’s customers to pay them.

Advise clients on the benefits of automated cash collection. With Direct Debit, for example, clients stay in control of when payments are taken from their customers’ bank accounts. Whether your clients bill the same or varying amounts each month, or provide ad hoc services for regular customers, Direct Debit provides predictable and on time payments.(See our guide for more advice on moving clients to Direct Debit).

You can also encourage clients to take advantage of the online invoicing. This is included as standard with many of the major cloud accounting software platforms (for example, Xero, QuickBooks and Sage) and can include one-click payment to speed up the time it takes customers to pay.

“From the early days we’ve made use of technology to help our own team and our clients work more efficiently, but the first thing I always think of when setting up something new, is: how is this going to affect the client? Paying with GoCardless was so simple that I decided to move our clients over to Direct Debit.” Ben Nacca, Founder, Cone Accounting

4) Focus on debt management

The greater the number of customers paying by Direct Debit, the less your clients will need to worry about debt management. But your advice will come in handy when Direct Debit is being used alongside other payments methods like bank transfer, cheques or cash payments.

Produce regular aged debt reports and show clients how produce these reports in real time. With both of you keeping an eye on things, debtor tracking becomes easier to manage.
Prioritise debts and identify the late payers. With this information, your clients know who to chase up quickly.
Automate credit control with tools like Chaser and Fluidly. These give detailed reports on any outstanding payments and send automatic chaser emails to your client’s customers.

5) Get proactive with cost management

Work with your clients to track, review and analyse direct and indirect costs. This will help them to balance out their cash flow.

Code all costs and cost centres – In your client’s accounting system, create specific codes for every cost, expense and business location to provide a better view of their spending.
Run regular reports on cash flow and expenses. From here you can highlight any areas where spending is high and talk to the client to see if there is any way to pull these costs back.
Take steps to reduce spending with clear actions to help the client manage them. Work with clients to streamline their spending processes, cut expenses, lower operational costs and boost overall cash flow.