Cash is the life blood of our businesses. It’s no secret, it’s not rocket science but cash flow is consistently one of the biggest pain points for Small Businesses everywhere.
So what can you do to improve cash flow?
- Invoice your customers.
Yes that’s what I said – just invoice your customers. Sounds too simple I know but I see many Small Businesses who are ‘too busy to invoice’. What? How can anyone be too busy to invoice? Good question because eventually it won’t matter how busy you are you won’t have any cash to pay wages, rent or even buy yourself a coffee.
I have a friend who is a plumber and he was complaining that he was a little tight for money and needed to get some money in the door and fast. When I dug a little it turns out that he did all his invoicing weekly.
A while back he didn’t do it and thought he’d just do it the following week. That week the pile was a little overwhelming so he put it off again….that was three months earlier and he still hadn’t done his invoicing.
No wonder he had no money – he hadn’t invoiced for three whole months. Now he wasn’t just feeling overwhelmed by the invoicing pile he was also worried about upsetting his customers and invoicing them so long after he’d done the job.
Invoicing is an essential part of doing business. It’s like having dinner and you need to incorporate it into your normal business routine – you can never be too busy to invoice.
If you do it regularly it is less of a chore and needless to say your bank account, and stress levels, will thank you for it – because guess what….if you don’t invoice your clients, you will never be paid.
- Make it easy for them to pay you.
Sending an invoice tells your client how much to pay you, but have you told them how to pay you? Have you given them instructions on how you want to be paid or are you expecting them to guess and perhaps just pop a cheque in the mail?
I don’t even own a cheque book and I haven’t for years, so if you haven’t put how to pay you on your invoice there’s a good chance it will go into my ‘too hard’ basket. Seriously, I don’t have time to call you and chase you for information on how to pay you – so I just won’t.
These days it’s a given that all invoices should have at an absolute minimum EFT details on them so at the very least your customers can transfer the money direct into your bank account.
Better still get BPAY and credit card facilities so that you have now given your customers a choice of how to pay you and you’ve made it easy. Even if their cash is a tad tight they can still use their credit card and you can still get paid.
- Ask to be paid.
Actually doing the invoice is only part of getting paid. Have you ever heard of the old saying “the squeaky wheel gets the oil”? Well it’s true.
If you aren’t following up and asking to be paid I can assure you that paying your invoice will not be at the top of the ‘to be paid’ pile of invoices. No-one likes being chased for money, it’s embarrassing and even worse it’s just downright painful if you’re robbing Peter to pay Paul and dreading the phone calls and guess how you manage a tight cash flow?
You pay the people that ask to be paid.
Originally published on Smallville 12/7/2016