One of the biggest problems faced by small businesses is consistent cash flow. A US Bank study found that cash flow problems account for why 82% of small businesses fail!
It’s understandable; many people who start businesses do so because they have a passion, not business experience. They want to fix a problem they see, or they want to share their creativity with the world. They may not have the business know how or understand what systems they need to put into place to keep their business afloat.
How to Prevent Cash Flow Problems
Here’s how you can avoid that cash flow crunch for yourself and keep your business (and personal life) running.
Have an Invoicing System
Handling all your invoices yourself is a sure fire way to get behind, miss details, or forget to follow up on late payments. You can’t keep your invoice to do list in your head, and updating a spreadsheet is a task that many dread.
Having an invoicing system like Due means you can create a template for your invoices, set up recurring payments, automatically set reminders to go out a certain amount of days beyond the due date. All those things that currently take up your brain space and work time? Due can do them for you.
Having automated invoices for recurring clients can mean regular payments. Reminders to late clients means there won’t be month long gaps between payments. These help insure there’s always cash coming in.
Invoice More Than Once a Month
A common trend in freelancing or small business work is to invoice only once a month- at the end, when you’ve completed all the work for each client.
There’s no law that says that’s what you have to do. And a great way to avoid a cash flow crunch in your business is to invoice as soon as you’re done with a client’s work. Sending out invoices throughout the month means that payments should come in throughout the month.
Set Up Systems ASAP
The more systems and structure you have in your business, the better off you’ll be. Having an invoicing software is one system. What else can you systematize?
Have templates for common emails you send; requests for your bio and head shot, pitches, etc.
Set up automated emails and marketing funnels; automating emails is a huge time saver and can generate sales.
Client management software; track warm and cold leads, send out contracts, and save data with a client management software.
Having systems in place will make it easier for cash to flow freely through your business. Often payments will get held up because there is a breakdown in a system or because there is no system. Avoid a cash flow crunch by keeping channels open and running smoothly.
Republished by permission. Original here