Alistair from Blok Design Co talks how payment workflows improve cash flow

Building a strong cash flow position

For fractional CFO Alistair Scarrott, there is one issue he finds with many small business owners: they don’t properly value their own time.

Working with different types of businesses across multiple sectors — from interior design to professional service firms to software licence providers — he has found many businesses would benefit immediately by putting in simple payment fixes.

Fortunately, one of his clients — interior design and property staging company Blok Design Co — is a clear exception. Based in Brisbane, the company helps style residential homes to prepare for sale and delivers both residential and commercial interior design projects. Since 2015, the company has built a strong portfolio of repeat clients, helping style more than 300 properties annually and undertaking more than 30 interior design projects per year.

Alistair began working with Blok Design Co about two years ago and found the company in a strong cash flow position at the beginning. For styling projects — which can last six to eight weeks — customers pay in advance for the initial hire period, and then can pay top-ups to extend property staging hire which have not yet sold on the market. Because of this payment frequency, the company very rarely has late payments and no payment delinquencies.

Setting up payment options is key to success

The secret to this cash flow success is the way the company has set up its payments workflow in Xero. Online invoices are all set up with Stripe credit card payments, enabling customers to quickly pay, which are then received and reconciled directly in Xero. The company also uses Xero Projects to manage timesheets for contractors, ensuring they can pay staff accurately, and manage any non-fixed costs against client projects.

On average, Blok Design Co receives all credit card payments within 48 hours, allowing them to manage their cash flow and seasonal slowdowns, such as Christmas. Most importantly, Alistair says, it allows the business owners to spend more time on the business, rather than in the business.

Yet many other businesses he interacts with struggle to get to the same result, often because they’re chasing late payments. When he begins working with a new customer, he pushes to understand two core things: how they interact with their customers, and how they want their customers to pay.

“Once you get a business owner to understand how they can sweat their working capital, the quicker you get it in. Most people, generally, have an idea of payables and due dates, but not everyone is using this time to their advantage” Alistair says.

Making it easy for customers to pay

Once he understands those details, he often spends his time making payments as easy as possible for customers — for instance, implementing direct debit via GoCardless for recurring payments like software licence fees, and credit card payments for smaller, ad-hoc payment needs.

Once these are set up correctly, businesses can get smaller invoices paid faster, often significantly boosting cash flow.

“The golden rule is always ‘a sale is never a sale until the cash hits the bank account’. You can easily pick up half a month's worth of operating capital by clearing 50 to 80 invoices less than $300 each, just by putting software and easy payments like credit cards in place,” Alistair says.

“Instead of spending time doing admin and operations, you’ll be able to spend the extra time tendering, winning more contracts, moving customers that bring more revenue in, knowing that your systems behind it can cope with the increase in scale.”

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