If you’re a small business owner, manager or anyone that is responsible for profitability, you very well know the struggles of maintaining good cash flow. And you rely on that cash flow to stay in business. You have to make payroll, keep the lights on, purchase products and the list goes on. In short, many small businesses are not that far away from being in a cash flow crunch.
Did you ever stop and try to figure out why your business might be losing cash? Whether you are running a lawn care company, a medical or dental practice, a karate school or other business, we know you could be seeing better cash flow.
Here are just three of the top reasons a small business is on the verge of a cash flow problem.
Customers Not Paying On Time:
It is a daily issue for any size business; customers not paying on time. And in many cases, not paying at all. You send out your invoice and hopefully you have your payment terms right on that invoice. But each month, you have a percentage of customers that don’t pay. And maybe it’s a small section of your clients but that’s just enough to put your books into negative territory. You are now forced to tap into your lines of credit just to make payroll. All because a handful of customers didn’t make your bill a priority.
Not Invoicing On Time:
Your customers might not be paying but are you guilty of not asking for the money? One of the number one reasons a small business is losing money is because they have no structured method for invoicing their customers on time. “I’ll get to it” is just not going to be a successful strategy in getting paid on time. You need to set aside time on a regular basis to invoice your customers. Depending on your type of business it could be weekly, monthly, every day, whatever your business is, it is critical you and your staff invoice on a regular basis.
Not Asking For Help:
There is a rule in accounts receivables. The longer a bill goes unpaid, the harder it is to collect that money. In other words, if you just continue to send statements on an unpaid bill, and that goes on for months on end without becoming more assertive in your collection efforts, it only becomes more difficult to get that customer to pay.
Your business needs to get more firm by making follow up calls and if that doesn’t prove to be effective, you should have a third-party collection agency ready to assist you. It should be a collection agency that is a good fit for your business, is not aggressive in its tactics and a plus is one that knows your industry. Sometimes all it takes is a little push to get a customer to make a payment or if their having issues, create a payment plan to pay you back. And a reputable collection agency can get your cash flow back on track.
Want more tips on getting paid and managing cash flow? Check out more from our blog.