Personnel management strategies to maximise cash flow

Good cash flow management is largely a result of having the right people and practices in place to take control of the money going in and out of your business, and ensuring that your credit policy gets executed. This is why it's important at the outset to hire the right staff  and make sure that existing employees are aware of their responsibilities. Here are three effective personnel management strategies to help you maximise cash flow.

Allocate specific employees for credit and/or collections

For businesses that don't have a specific person with responsibility for credit and cash flow management, the reality is that everyone winds up being involved in the process at some stage. Whether it's taking on a new customer, negotiating payment terms or answering a call from a late payer, all employees are likely to have a role in communicating and managing your firm's credit and collections function.

More often than not, this process can get messy and it's easy to forget which employee spoke to which customer, which can result in neglected customers and unpaid debts. The problem with not having a role of a credit manager is that the job often gets incorporated into someone's broader responsibilities such as the owner or bookkeeper.

If you're feeling under the pump, it may be worthwhile to hire someone for the specific role of debt collection or credit management. If you don't have the funds to do so, consider allocating this responsibility to just one person, and ensure they set aside one or two days to work on this task.

Communicate your policy clearly

It's critical that your business has a policy that is simple and understood by everyone, even if you have just the one person in charge of your credit and cash flow management. For instance, if your policy is payment in 30 days then every sales person needs to know this is non-negotiable in every contract. If late payments incur an extra charge, then the receptionist will need to know that customers that call with explanations about late payments must be dealt with immediately.

Not communicating your policy can cost your firm money, time and resources. You can make it easier on everyone by restating the policy at regular meetings, and putting it in writing (either in email to the whole company or by making it visible in common areas of the business).

Explaining why these policies exist is also beneficial to staff. Help them understand that late payment puts pressure on cash flow and reduces your ability to pay your bills on time, including wages. 

Read: Turning your credit policy into action  and Developing a credit policy.

Equip staff with appropriate resources and skills

You can't expect your staff responsible for credit and collections to be effective at what they do if you don't focus on equipping them with the appropriate resources and skills. This is especially the case if credit and collections duties are performed as part of a larger role.

There are plenty of information sources - including magazines, journals, websites - that staff can access for free. Consider signing them up for a credit management newsletter or magazine subscription, or attend a couple of courses and seminars to become a more effective credit and collections officer. For example, the Australian Institute of Credit Management (AICM) offers access to courses, industry events and accreditation.

At the end of the day, you are responsible for personnel management and for communicating the key messages to your staff. Ensure that you make credit and collections a priority in your business, and your staff will follow.

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