Cash flow can be a problem for many small business owners. I know because I’m one of those who struggles with it. I also have conversations with my colleagues about how they struggle with it.
Granted, many of us aren’t struggling with cash flow as much as we used to. That’s because we’ve implemented some strategies to help us. Here are some of those strategies in case you’re in the same boat.
You’re doing payments manually
In 2017 I switched to automatic payments for both my group coaching students and my private coaching clients. This has been revolutionary for my business because I know what’s coming and when.
Additionally, after trying this for a few months, I now realize that it significantly reduces the number of late payments I receive. They still happen every once in a while, but not nearly as often as they used to.
You’re only invoicing once a month
This is a cash flow trick I learned from a colleague a few years ago. Rather than waiting until the end of the month to invoice clients, do it every two weeks. This is especially helpful if you’re dealing with net 30 payment terms or need to wait for a check. This way, you have money coming in every two weeks instead of every 30 days. T
I also did this for a spokesperson contract. They wanted to pay me in one large sum at the end of the project. I negotiated with them to split it into two payments – one halfway through the project and the other half when the project is completed.
You’re not trying to get money upfront
Another option for relieving your struggles with cash flow is to ask for some money upfront in the form of a deposit. This doesn’t work for every client, but you’d be surprised how many of them are open to it. This is especially true if they know you are busy and sought after for your work.
You’re still dealing with checks
There is one client who kept paying me with a check and I constantly had to deal with late payments. After a few months of this, I suggested we do direct deposit. They had no issues with this whatsoever and got their accounting team right on it.
You get lazy
All the cash flow tips I’ve mentioned up until this point refer to specific payment terms and strategies. Now I want to talk about a major problem I see among business owners – their lack of foresight.
I often see business owners who get one big project and then think they can coast. When that project ends, they realize they have nothing lined up and start freaking out. You can avoid this all together if you are consistently selling and pitching. If you never stop looking for work then you will experience less cash flow problems.
Can cash flow be a struggle for many businesses? Yes. Does it have to be? Not really. By building the right systems and taking the proper precautions you can have more stable cash flow and better plan your finances.