Small business cash flow management will help you collect more cash for all your labor. I don’t know about you, but if I invest my soul in a project for a client, bill them, and then never get paid for that work, it puts a real crimp in my attitude.
How can you avoid this? Here are five tips that are guaranteed to improve your odds of getting fully paid, on time.
Cash Flow Management Tip #1
Know what the payment cycle is at the client. Large clients are especially important. Find out from the accounts payable clerk when the company cuts checks and pays bills. It’s often once a week, twice or once a month. Most organizations group their bills and pay them on the same date. Put those dates in your calendar. Verify once a quarter that the process is still the same. If you send an invoice right after a cut off date, you’ll have to wait until the next check cutting cycle to get paid. Waiting to get paid always costs you money.
Cash Flow Management Tip #2
When you send in an invoice, always confirm the client received the invoice. If you send the invoice via email, send it with a confirmation request. It is too important to get lost. It also provides a paper trail in case someone leaves the company or tries to give all kinds of clueless excuses why your bill wasn’t paid. “You didn’t receive the invoice? That’s odd. Here’s the confirmation on 11/11 saying you did.”
Cash Flow Management Tip #3
Once you know the dates the client pays the bills, make sure your invoice is sent to the client in advance of the next check-cutting date. If the invoice is small enough, you might not have to wait for the next billing/ check payment cycle. This really does work.
Cash Flow Management Tip #4
Know what the sign off authority is at the client. Most clients have sign off protocol on invoices greater than a certain size. It’s a standard way of managing risk. In some cases, if an invoice is larger than $5000, the accounts payable clerk needs to get the manager’s approval before cutting the check.
In a soft economy, the requirements for approvals get more stringent. More people have to sign off on smaller invoices. That process takes time. Time is not your friend when it comes to getting paid. Read tip #5 and which shows you how to avoid the “approval Bermuda Triangle” and get paid faster.
Cash Flow Management Tip #5
Make it easier for clients to pay you. Send smaller invoices with greater frequency and you’ll get paid faster. The faster you get paid, the less cash you’ll have to borrow to keep your doors open.
Four invoices for $2500 will get paid a whole lot faster than one invoice for $10,000.
Don’t believe me? Try it. If the customer writes a big order, stagger ship the order so you can stagger invoice the client.
If the client has problems paying, you won’t be out the entire value of the order.
Trust me. I would have made a lot more money if I followed this advice fifteen years ago.
If you have some cash flow management tips, we’d love to hear about them!
Go here to learn even more about Small Business Cash Flow Management Tips
If you’ve taken our advice, we’d like to know how it worked out. We’re always looking for new inspiration.
In your corner,
Dawn Fotopulos
__________________________________________________________________________________________
Be sure to watch our Instant CFO Course on Cash Flow Management which provides many other ways you can conserve cash and make more money. A $249 value for $49. And you receive the Instant Marketing Manager Course and Instant Sales Manager Courses a bonus!
If you’re not completely thrilled with what you learn, we’ll refund your money. You have nothing to lose!
