For some businesses, the time between now and the New Year can be very quiet.
For others, it’s the busiest time of the year.
One thing we can all be sure of, working for yourself usually means the end of regular pay cheques. Making sure you’re on top of your cash flow is vital for you to be able to financially manage when business is quiet.
Here are some tips on managing cash flow when you work for yourself:
Just do it!
Many small business owners put off invoicing until there’s nothing else on the ‘important list’ or your books are so out of date it’s embarrassing! But you need cash flowing into your business so you can pay your invoices.
Set aside a regular time to send out invoices to your clients. By using software like QuickBooks (read more about our Quickbooks partnership) you can see real-time live figures which help you keep your finger on the pulse.
Although it’s convenient to set aside a weekly or monthly time to send invoices, research shows some interesting statistics that might make you think again.
According to the ‘Recency effect’ the best time to send your invoices is immediately after you’ve done the work. If you delay, your client will too.
So once you’ve checked your client is happy to sign off the work, log into your accounting software and get that invoice sent out. It will feel great to cross it off your To Do list.
State your terms of payment
Before you send your invoice, make sure your client knows when you expect to be paid. And if cash flow is an issue for you, consider rethinking your terms.
Most clients will wait to pay you (unless you’ve followed our ‘invoice quickly’ tip of course!), so if you state immediate payment, you’ll be most likely to get paid within a fortnight. If you state 30 days then you’ll most likely get paid within 60.
Dealing with late payers
You’ve delivered great work, invoiced straight away and shared your terms. But not all people pay quickly, so now it’s time to politely but proactively chase.
We shared some ideas with our post “Five ways to chase your debts without losing your clients.” In it we included ways to get paid without losing your patience, your sanity, or your business!
Simple tips such as friendly phone calls and a payment plan can make all the difference.