No matter what the economy is doing, getting cash to flow properly in a small business is an ongoing challenge. Making sure you have your business set up to get paid faster can help you stay in the black.
Here are three quick tactics you can implement to make sure your small business is on the right track.
1. Get Those Invoices Out the Door
One of the things many small-business owners complain about is invoicing—as in, “Ugh! I have to get my invoices done.” It’s time to change that mindset. Invoicing means money will be coming into your business. If you celebrate it as an opportunity to pump up your bottom line, you may find it much more palatable. Try to do your invoicing as soon as the work is done. Don’t wait until the end of the month to bill for work that was completed early in the month. Set up your agreements so invoices are paid in 10 or 15 days (or less!) rather than the typical 30-day payment deadline. And don’t forget to put a “due by” date on the invoice. Most aren't motivated to pay a bill that doesn’t have a due date.
2. Accept Credit Cards as a Payment Option
To accept credit cards, you’ll need to set up a merchant account. It will cost you a percentage of the sale, but may be worth it in the long run to have your cash in just a few days rather than waiting a month or longer. You may also find it can increase your sales volume, since so many people would rather buy on a credit card these days. Then all you’ll have to say to your customers is, “May I put that on your credit card?” Simple.
3. Set Up Incremental Billing
Setting up payment milestones for work can help you stay on an even keel with your cash flow. During contract negotiations, set up billing so you get a portion of the payment when you start work, another portion at the halfway point, and the balance when the work is completed.
Read more articles about cash flow.