Remember the movie “Dude, Where’s My Car?” Well, have you ever said to yourself, where’s my cash?
There are insights we have as a collection agency that works with small business. And we get questions all the time when we sit down and talk with small business owners and others like you. They are always asking where their cash is. “We see some of our money coming in, but not all of it.” A common theme when we consult with concerned businesses.
You need to know where your cash is at all times as a small business. Everything from keeping track of the cash that goes in and out of your business to the people that are paying and not paying you. If you let this critical part of your business slide, you’ll be asking that question too. Where’s my cash?
While our main focus here is to recover money that is owed to your business, we also understand that cash has several other ways of hiding from you.
A few items for you to keep track of on a regular basis are:
We know a little bit about accounts receivables as you might imagine. As a collection agency, it’s what we do when the receivables don’t come in on time. We help.
There is a good percentage of businesses that do a good job at keeping up on the receivables in their business and there are equal amounts of businesses that could do better. We have helped both. When a business understands the importance of staying on top of their receivables and getting help before it’s too late, their cash flow should stay positive. But when a business lets late-paying customers go months without a payment, that’s when cash flow suffers.
Regardless of the type of business you are in, your accounts receivables need all the attention you can give them. That includes clear internal procedures such as regular invoicing and follow ups and that extra help when you’re not getting paid.
Make sure everyone that has anything to do with getting your customers to pay for services understands any and all internal expectations for payments. Submitting paperwork on time for time spent with a client, other billables such as products they purchased from you and any other details associated with payments to your business.
Monitor Cash Flow:
While in an ideal world, you would want to have a daily understanding of your cash flow, we understand that might not be possible depending on the type of business you operate. But regular should be the key word here. Make sure you have a regular understanding of where you stand on cash flow. If you are a consulting business, maybe your cash situation won’t change much in seven days. But if you are in the trades, your cash can change daily. It’s imperative you keep a close eye on your cash at all times, Not just once a month.
If you are running a seasonal business, you’ll definitely want to listen up. You need to preserve your cash reserves. While the advice differs depending on who you talk with, having three to six months of cash on hand is a good measurement to stand by. One clear example is the lawn care and landscaping industry. While many supplement their income with snow removal, if it doesn’t snow that much, it doesn’t help that you depended on that possible income.
There is also a downturn in business you need to be prepared for. It could be a whole host of reasons. Maybe you lost a big account, or you have potential leads that have not turned into real business yet. You have to be prepared for a time when revenue is down.
Keep an Eye on Expenses:
Once again, it depends on your industry as to the number of payables you might have but you need to keep a close eye on these. And if you can’t, get help.
When you ask, where’s my cash?, you might also say, I had no idea I was paying for this… When you don’t pay attention, you’ll eventually find things you had no idea were costing you money. Look at everything you are paying for regularly and make adjustments where needed.
This also goes for inventory if you sell physical items. Inventory is money and it’s not doing you any good to sit on six months of a product when that money could be in the bank.
A common theme we write about here is getting help. You don’t have to do it all yourself or even delegate it to someone that might not have the skillset. Getting the proper help might cost you money but the money you can save by having professionals by your side could be big. Those include a qualified bookkeeper to keep an eye on your books and pay your bills on time. It can be a CPA which is almost a no-brainer in this day and age. And it can be a collection agency that specializes in small business. All these are smart investments in your business.
They will help you get your money, get it on time, keep it for when you need it and have you less stressed out in the long run.