Cash flow
The lack of cash in a business is not an external issue, but an internal one. If you want to change this problem, you have to be serious about your business financial health and make the tough decisions. Once this one decision is made – you will never look back or regret making the decision.
Here are 7 no-brainer moves that you can easily make to improve the cash flow for your business.
Knowing the problem is YOUR to remedy
It’s easy to blame our customers or clients for not paying us on time. So easy, that we ignore the reasons we can’t access the cash we need, when we need it. If your clients aren’t paying you on time, put a structure in place to ensure you are running your business like a business. Having access to money is critical to your business surviving.
Creating the Structure
All structure actually means is treating every aspect of the business with equal importance. An example: you have had an online invoicing program for years, but what have been too busy to get the value it provides i.e.: treating the business side of your business with equal importance. As an owner of a business it’s easy to get sucked into the work and ignore getting paid for the work. Here are three ways that you can create a financial infrastructure for your day-to-day business activities. Adjust them to suit your business’s needs and they will drastically improve your cash flow.
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Deposits:
It is very good practise, no matter what the service you provide to charge a deposit before commencing the work. This demonstrates goodwill from both sides—you are ready to start for those customers ready to pay. Whether a service or physical items, this works. There is no commitment more than money paid.
Cash is king if you have it! -
Invoicing Practices:
When you deliver the final component of a project, invoice immediately. Not once a week, not once a month—when something is delivered. Waiting to invoice is a way to let things “slip through the cracks”. Set up recurring invoicing for your retainer clients. You don’t have to do anything—these invoices can be sent to your clients automatically. With technology, you can even invoice from your phone whilst at your client. Even if it is a manual invoice book! On the spot invoices are a big factor to getting paid sooner.
Contact us about software available that allows you to do this, like Sage, Xero or QuickBooks online. We are advisors.
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Weekly:
Make an appointment every week at the same time to review what you have outstanding and what has been paid. For example: every Friday at 11 a.m. Once again using technology (like SageOne), you can open your dashboard and review what’s paid, what’s pending and what might be late. This does not take a long time and you do not have to be an accountant to know how it works. You can get an overview of your business in a glance and then follow up if necessary on any item that stands out. The beauty of technology means that you do not have to be in the office to do this.
Keep it Clean and Simple
Starting out, your personal and business bank accounts may be the same account. We cannot urge you strongly enough to change that as soon as possible. This keeps things clean and simple. With your business and personal accounts now completely segregated, you have even more incentive to keep up with your invoicing. Cash flow will never be a problem because you can look at the bank account and know at any point in time where you are sitting in terms of cash in the bank.
Getting Help
Probably the hardest bit of advice to take. You need help and you should get it. Our policy is to add value to your life and your business. We recommend that you use this in order to seek help. If you are using somebody’s services and they are adding value – that’s 100% perfect. That’s ideal. If not, then terminate their services by paying them for work (not) done. Whether or not they are making a difference – value the time they have put in and pay them their dues. You would expect the same.
So, who to hire?
This depends on what type of company you are running, as well as how big the company is. Our suggestion at first, start with “little extras” like tax and payroll. This will allow you to “test the waters” of outsourcing your functions. This is often far more affordable than hiring someone full time. These services ensure that the functions are taken care of without you having to worry about it.
Getting help means that you take your business seriously enough to get the best advice.
Embracing Resources
Resources come in many different shapes and forms. The online resource has dramatically changed the face of the business world forever. At no time before have we had more information at the click of a button. The online accounting software and the corresponding application has again changed the way you will do business. SageOne is a very simple yet exceptionally powerful tool that can only make you more efficient and enhance your business growth. Embrace the resources and use them to their full potential.
Lose the Headaches
Some clients will never (ever) pay on time. Given that you truly love working with all your clients (if you don’t, then start purging the clients that are a headache), establish early pay discounts and late payment penalties. Going forward, offer a reward for those slow-to-pay clients who step to the plate and pay early. You will also be paid for waiting when they go beyond our agreed upon payment terms. Either way, you get paid. The result will be that you will be paid early more often than late. Also see the point above about deposits and even consider up front payment
Be Willing to learn
Once you are willing to make the change, money will start landing in the bank and flowing effortlessly where you need it to go: bills, contractors, expenses, payroll, savings, healthcare, and retirement. Being willing will make it possible to enjoy owning a small business. That’s a welcome change after (possibly) years of being ready and able to make you cash flow worries a thing of the past.
In conclusion
Yes, these are called “no- brainers”—but before you implement them, they may seem anything but. Here’s to combining ready, willing, and able and putting these no-brainers to work for your business.
If you are stressed about cash flow and where the next salary run is coming from – we can help you. Contact us for more information on how managing your cash flow can be a burden off your shoulders.
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