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5 Steps of Managing Payments for Your Business (2020 Updated)

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Managing business payments is one of the most important skills that every entrepreneur should know. It may look like an easy task. However, the reality is so different as it includes the business revenue analysis and many other factors. 

Shortfalling is normal for businesses. Even a minor mistake in managing payments can disrupt your cash flow. The best way to avoid it is by calculating all the possible expenses and working accordingly.

This article will provide you 5 steps of managing payments for your business while keeping the cash flow for other business operations. All these steps are general and work for almost every type of business payments. 

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Pay Your Phone Bills

A business needs to connect with its customers through a phone calling system. Hence, it is necessary to pay your phone bills at the right time to avoid extra charges. 

However, you can always use a virtual phone number such as WeNumber to pay only for the calls you make without any additional charge. 

You can check the 0300 numbers EE cost on WeNumber to check the difference in calling costs of landline and virtual numbers.

Analyze Your Business Position And Revenue

Secondly, you need to check whether your business is in a position to make payments or not. If you have enough cash flow, then you can proceed to payments. On the other hand, if there are some shortfalls, then you can use the credit payment terms.

It allows you to make the payments under the next 30 days of your purchase order. Hence, it is necessary to know the position of your business before deciding to pay off your due payments. 

Additionally, the revenue of your business also plays a crucial role in the payments. If you have enough cash flow and are expecting an increase in revenue, then it is better to make payments instantly. 

Report the Expense And Purchase Order

After analyzing the business position, it is time to make a report of all the expenses and payments that you need to clear. It is always better to start with the oldest payments and create a plan to pay them at the beginning.

Another thing to consider here is the payment discounts that some dealers provide on instant payments. Hence, you will get some more money in your hand by getting the proper orders from your clients. 

You can use the excess cash in hand to make the payments to get some additional discounts for your payments. 

Track the Due Payments 

The fourth step includes tracking the due payments to help you clear the priority payments in the beginning. It is better to communicate with the suppliers and vendors to know their position and order details.

We have included this step in our guide because, in some instances, the payment date gets mixed up with multiple vendors. Hence, tracking down the due payments is the best practice to ensure that the priority orders are cleared first.

If most of your payments are cleared, then asking whether your suppliers need payment before time is a great way to improve your relations with them.  

Paying the Bills

This step is where you start paying the due bills of your suppliers. It is crucial to separate the operation bills from the salaries based on their priorities. Below are some of the payments that you make in a business:

  • Pay your Rent: Every organization requires a workplace to operate their business. Clearing your rent payments is a great way to ensure that you do not have to compromise with the operations. 
  • Pay the Salary: Running a successful business requires you to pay your employees on time. Hence, you will need to consider the salary costs of your business while prioritizing the payments.
  • Use Electronic Means to Pay Bills: Using the electronic platforms to make the payments saves you a lot of money than the traditional payments. These payments offer you some additional coupons and discounts to help you save some extra dollars. 

Another advantage of using electronic platforms is the fact it is easier to manage your transactions online. You can keep all your records separately and access them within a few seconds.

Know that there are times when it is harder to manage your payments due to lack of cash in hand. It is normal in businesses and your relationship with the suppliers is what you need in those times. 

However, we believe that following the steps that we have discussed in this article will avoid any chances of shortfalling. Additionally, you can start creating a separate budget for unexpected payments. 

It will help you cover all the expenses when you face any condition with the flow of cash. You can follow the tips such as switching to a virtual number and clearing the due payments. Visit WeNumber for more details on how the virtual system works.

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Last modified: July 15, 2020