Your Enterprise Resource Planning (ERP) software is the lifeblood of your operations and is instrumental in running your entire back office. So why not use it to increase your cash flow? A robust ERP solution can help benefit your business by maximizing your cash flow. Below are three ways you can modify your processes today to increase your cash flow.
1. Hit the Money
This is the term we use to determine the optimal time to bill a customer for their rental. Most rental companies give renters a break on charges for renting a piece of equipment for a month rather than a single day. “Hitting the money” means you invoice the customer as soon as the rental revenue has been earned rather than waiting for the end of the month.
For example if the monthly rate is 3 times the weekly rate, invoicing the customer after the 3rd week rather than waiting until after the 4th brings in cash sooner. You can recognize that revenue sooner and get it billed and paid sooner.
2. Understand your State’s Lien or Pre-lien Laws
In some states you are able to protect your rental revenue and ensure payment by putting a lien on the property where you equipment is being used. If your rental equipment is used at a job site and the construction company renting your equipment does not pay you, you may be entitled to go after the ultimate property owner for payment. This is a powerful tool to help leverage if the renter is reluctant to pay you. The job site owner can help pressure the contractor into making sure you get paid. Many times the pre-lien paperwork is enough to get payment flowing from your rental to your business.
3. Easy Online Credit Card Payment
Encourage fast payment through an easy to use customer portal. Make it easy for your customers to pay via credit card and provide a tool where they can see all outstanding balances, due dates, and job detail. Don’t delay the process with back and forth emails, paper invoices and checks in the mail. Make it faster through your portal and maximize your cash flow.
All three of these strategies are worth looking at now to see if they can speed up your cash flow. A good ERP system can help you execute these efforts seamlessly with software designed for equipment rental companies. Email us if you want to discuss how Wynne can put these strategies in place for your business.