Cash flow is king when it comes to business ownership. It’s the least sexy part of running a business, but absolutely the most critical! Many failed businesses don’t fail because of lack of profits – they fail due to mismanagement of their money, and not running out of cash flow. If you run out of working capital, your business will grind to a halt, so it’s essential that you concentrate on your making your cash flow as healthy as possible.
Here are our Top 5 Tips on how to keep the cash flowing into your business in a healthy and sustainable way:
1. INVOICE PROMPTLY:
The biggest mistake small business owners make, is waiting to send invoices to their clients. Once you’ve completed a service, or shipped a product, invoice immediately. This shows your customer that you’re serious about the business transaction, and encourages them to pay you promptly.
2. BE THE ENFORCER:
Set payment terms and stick to them! If you’ve issued an invoice with 7 day payment terms, set a reminder to follow up on day 8 if it hasn’t been paid. A polite and courteous follow up might just be the prompt your customer needs to remember to pay their bill. Don’t be embarrassed – be consistent.
3. EMBARRASSMENT FREE ZONE:
Small business owners, especially us creative types, find it difficult talking about money. BUT money makes the business world go round! It is the necessary evil that we all must embrace. If you’ve delivered a product or service, you deserve to be paid. No questions asked.
4. SHOW ME THE MONEY!:
Make it easy for your customers to pay you. Use payment systems such as Paypal or Stripe that allows you to take credit card payments. Yes, they’ll charge you a fee, but it’s better to receive 100% – 6% of your money, than 0% of the money owed to you, right?!
5. LEAD BY EXAMPLE:
Good habits pay dividends. Make sure you practice what you preach and pay your own bills on time, every time. There’s nothing worse than having a healthy bank account but a stack of bills owing – this just clouds your visibility on just how profitable your business really is.