cash management

How Important Is It To Your Business To Get…

Well? How important is it? Pretty vital right. So why do so many businesses not follow up on invoices?

We all hate asking for money and let's face it sometimes we have to ask repeatedly but in business we've earned it. If you went out for a few drinks on Friday night you wouldn't get any without having to pay first, dropping the money in next week when you get paid isn't an option. So here's my tips for getting paid:

Get the invoices out within the first 2-3 days of the month, that way even if you are dealing with businesses who do pay-runs on the 26th of the month you're in early and are more likely to get paid that if you send out the invoices on the 20th.
Send statements, they work as a reminder of what's outstanding to you without you having to phone anyone.
Use a red pen if necessary but ALWAYS be polite, there is no reason for bad blood in business and if there is some don't let it be coming from you.
Adhere to your own payment terms, if your policy is to add interest once bills get well overdue then issue a warning with your red pen (politely) prior to adding the interest.
Don't be afraid to pick up the phone, after all you've already supplied the goods or services, you deserve to be paid.
Stop supplying someone if you know they are unlikely to pay, making the bill bigger isn't going to entice them to pay you more.

Do you have any tips on what works for you?

Bookkeeping

Cash Flows & Budgets

Cash Flow is essentially a forecast based on past experience and current knowledge of income and expenses. For example, you know that your electricity bill arrives every 2 months so you can look at last year and work out the average. This is inputted every 2^nd month on the CF. You may need to adjust if your business is seasonal and uses a higher amount over winter for example. Or if you consider heating oil – this generally is an expense in approximately October and January but not in May or August.

Cash Flow always starts with your current bank balance (if you have multiple accounts you may wish to do a Cash Flow on each one or add them together – just remember which you do so that your Cash Flow is as accurate as possible 😊).

When you have inputted your income & expenses then your bank balance will update across each month. What you are looking for here is if at any point it goes red – this is where you need to act. That could mean applying for loans or grants, following up more strictly on outstanding bills or look at your expenses and cut down where possible. It looks month by month.

A Budget tends to be more project focused or annually. You will have similar information as in the Cash Flow, but the projects would have more detail. Depending on your reason for doing a Budget – family expenses, holiday planning, new business plan, new projects in existing business – you will ask varying questions. Though there are some commonalities such as what income have I and when is likely to arrive, known / expected costs, etc. But then the projects / reason for doing a Budget gets pieced in so you need to ask questions like what are you trying to do, when does it need to be done by, what costs are involved, what outside support will be needed & what will it cost, what will your contingency be.

This might seem like a lot of hard and time-consuming work but in the long-run it will set you up so that your home or business runs well and you can avoid any nasty surprises!!!

How Important Is It To Your Business To Get…

Cash Flows & Budgets

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