Take command of your cash flow.
According to QuickBooks, sixty-one percent of small business owners regularly struggle with cash flow.
Cash flow problems may seem particularly overwhelming now due to the “COVID-19 Cash Crunch”, but even when things are great, managing cash can be challenging.
Here are six things you can change right now to improve your cash flow management.
Stop Working for Free
Have you ever calculated how much time you spend giving free advice? While helping someone out is always a nice idea, you worked hard to learn your craft. You spent hours honing your skills. It’s OK to let people know that you bill for your services.
On that note, you also need to
Send Out Invoices
When you do work that you should be paid for, you need to invoice your customers. Regularly. We have helped clients significantly improve their cash flow by helping them create invoice templates that make it easy to bill weekly.
Speaking of billing, why not
Get Paid on Retainer
If you know that you typically do a set amount of work for a customer, you can ask to be paid, at least partially, ahead of time. This is normal in most industries. If you hire an attorney, they ask for money up front. If you hire a contractor, they ask for partial payment up front. Even as an outsourced services company, we invoice for the work we are about to complete each month.
Another way to keep the cash flowing is to
Ask for Partial Payments
Often, it’s easier (more comfortable) to ask for small chunks than it is to ask for a lump sum. If you’re working on a long-term project this is a great way to keep money coming in. And if your customers are having cash flow challenges also, they’ll really appreciate the flexibility.
About that flexibility, did you know you can
Leverage Credit Cards
This works two ways. First, you can ask your customers to pay you with a credit card or an electronic payment system / ACH. This gets money coming in the door in only a few days, instead of waiting weeks (and sometimes months) to get paid. Second, when you purchase things using a credit card, not only do you get miles or points, but you also have about 30 days to pay off your bill. (Be sure you pay off your balance in full, though, or you might cause a whole new set of problems.)
One more thing to consider is to
Increase Your Rates
Have you looked at what the profit margin should be for your industry? Are you close? If not, you may consider a price increase. The only thing worse than working for free is working for less than you’re worth.
For longer-term solutions remember to look at cost-savings measures, too. You can also negotiate your interest rates, ask for better terms, eliminate excess, and evaluate effectiveness.
Are you having trouble with cash flow?
Give us a call. Since 2007, HireEffect™ has been helping organizations across various industries grow their operations. It’s like having a business partner in your back pocket. We are here whenever you need us.