Business is doing well (or has up until now), but where is all the money? Cash Flow issues are the number one reason businesses fail. Often money is held up in Accounts Receivable or Inventory, but we still have things we can change. Sometimes the answers are easy to see. Sometimes we have to think outside of that box to get that money flowing back into the business. Consider trying something new for that money inertia you are needing:
Cash Flow issues are the number one reason businesses fail.
Retainers - Regular customers could receive a small discount in exchange for prepaying for your services. If you offer lawn care, ask if they would like to pay for a month or season upfront. It is also less for them to remember to pay. Set up a system to reward, record, and track such prepayments
Deposits - Take a percentage upfront especially when you have a lot of materials to costs. It isn’t unreasonable to take a deposit for work upcoming.
Project tracking with percentage payments- If you have a large or even moderate size project, it may be worthwhile to set up a Project in QuickBooks. You can track expenses, time, and progress. Now you can easily track and request periodic percentage payments. You get some percentage of the full cost after certain percentages of the project are complete. Quickbooks Online can also make that invoicing process incredibly easy.
Rapid Invoicing - Consider rapid email invoices, even if you still want to pop that invoice in the mail for extra security. Invoices through Quickbooks and other programs will allow on the spot payments. In the long run, it can save you money too with stamps, paper, envelopes, and time. Let customers know to expect an email too. Also, do not procrastinate creating the invoice because time is really critical. You get it in their hand before buyers remorse, distractions, or life, in general, gets in the way of them paying you.
Fast Payments - If you haven’t offered customers the option of credit card payments or ACH transfers, it is time to consider doing so. It gives customers more options to pay you, and the speed of payment compensates for the small costs. You need zero equipment and minimal integration with Square, Stripe, or Quickbook Payments. What is better than customers being able to hit a button upon receiving their digital email invoice and submitting a payment right away.
Payment Terms - Negotiate terms upfront and don’t be afraid to follow through. Consider early payment rewards, late payment penalties, and requesting payments due upon receipt.
Payment Reminders - Do not be afraid to send reminders for outstanding payments. A plan of escalation may be necessary, but sometimes it is a kind reminder is all the necessary prompting. You can set up automatic payment reminders in many invoicing software programs.
Inventory Based Business
That stale inventory has been sitting around far too long. That inventory has to move to get money back in. Then you can invest in something that will move faster. Also, broadening your sales market is very easy to do in today’s technology-driven world. The current economic conditions are perfect to do so.
Increasing Market Sales Opportunities:
Youtube or Facebook live product sales (tell them how to buy it)
Also, other options to move that inventory:
Reward loyal customers with discounts on inventory that needs to move. Quickbooks Online has easy options to set up customer types with special pricing.
Other sales to get the cash in and old inventory out.
Renegotiate bulk inventory purchasing with new purchases.
Pricing - you may think it may be the worst time to increase prices but it may not be. The price of toilet paper certainly didn’t hesitate. However, if it means going out of business or a slight price increase, charging a little more may be the right choice.
Overhead & the Unnecessaries - It may be time to rethink extra expenses and unnecessary costs. Yet, just because you don’t have to have it, doesn’t mean you toss it out without a thought. It is about the current value for your businesses. If the Radio ad is sending most customers to your location currently, you may not want to gd of that yet. If the billboard is only familiarizing people with your name, it can wait. It is all about how much it is bringing to your company currently.
Also, consider professional help with your specific situation so that you have a customized plan of action. A good bookkeeper, ahem, can do just that for you. Also, I am a huge fan of the new “Float” app for cash flow in a visual form. Be sure to check that out as well!