According to a U.S. Bank study, 82% of businesses fail because of cash flow problems. However, is there a way to avoid catastrophe altogether? While the occasional “surprise” or economic challenge may be unavoidable, small businesses can manage their cash flow with smart practices.
Below are five tactics that can help small business stay ahead of cash flow problems. Flower Mound business consultants help with cash flow. Our goal is for you to be able to acquire the immediate cash flow you need for long-term success.
Just think to yourself: The sooner you send the invoice, the sooner you’ll get paid! Prepare and send off your invoices immediately following the completion of the job or sale. Waiting to send invoices creates the perception that you don’t need the money right now. Another way to stand firm on payment terms and expedite the process is through incentives, like payment discounts.
As with all first impressions, you only have one chance to show your customers how you expect payment for your services or products. Many small business owners find that reaching out to their customers and walking them through the first invoice is beneficial to not only receiving payments but also to enhancing the business relationship. Following this, they maintain contact by following up a few days before the invoice is due to set a reminder and ensure that the invoice was approved. Once the invoice is paid, they call their customers and thank them for following the payment terms.
Online invoicing, sometimes called e-invoicing, makes the process of invoicing much simpler. With the myriad online invoicing options available, small business owners can easily create and send invoices, track time, manage their expenses and get payments online. Many software applications, such as FreshBooks, also have the capabilities that allow you to track invoice communication, so that you know when your invoices are sent, viewed, and paid.
Many online resources exist for both operational management and financial management. With the onset of software and applications, small business owners can now manage their cash flow and finances with easy-to-use, inexpensive, and secure digital tools. Tasks like accounting, bookkeeping, invoicing, and payroll no longer need to be tedious and time-consuming. Even platforms like Dropbox and Google Drive are places where you store and keep track of cash flow.
When running a business, stay positive and hopeful with new business leads and potential opportunities. However, when managing your cash flow, you have to stay realistic. Pay on the revenue that you have, not on what you hope to make. Make payments, purchases and payroll based on what you actually have in the bank. This will keep you mindful about what you are able to spend and how you should be budgeting. Effectively manage your cash flow in order to prevent business failure.
Call Williams & Kunkel CPA today in Flower Mound at 972-446-1040 to have a chat and find out how you can grow your business.