It is almost an essential truth of being a small business owner: there is no such thing as guaranteed, year-round cash flow. You may have some quite good months that are then followed by some not so great months. And as a solo entrepreneur, those short-term cash flow problems can really add up negatively. Of course, there are always things you can do to help fix those short-term cash flow woes.
Set Up Payment Schedules That Work for You
While, yes, many payments must be paid at set monthly dates, there are also many vendors or expenses that allow you to choose your own payment schedule. Some will have the option for monthly, quarterly and annual payment due dates, and you can choose the option that best aligns with the peaks and valleys of your cash flow.
If your business tends to run seasonally, for example, and you can safely bet on having stronger funds coming in the summer months, but expect a dip say, around the end of the year, you can help yourself quite a lot by actively seeking out payment blocks that allow you to make your biggest payments when you are most ripe with cash, rather than having to foot a monthly bill in leaner times.
Along the same lines, many vendors will also offer a discount for annual subscription rates versus monthly plans. A once a year lump sum can help set their mind at ease about your ability to pay on time as well as working into your own financial patterns, plus saving a little money, in the long run, will only help.
Make It Easier for Clients to Pay You Faster – or at Least on Time
Your only source of income, after all, is client payment, so why not make it even easier for them to hand you those funds? And why not do that all without spending a dime more?
One thing to look into is setting up automatic billing. By getting your clients into an automated cycle where they expect the money to be automatically deducted from their accounts and your business will be credited without a second thought. Take advantage of that allows you to set up these automatic payments, so you do not have to spend any more money to get your own money even faster. By creating recurring invoices and setting up automatic repeat billing, you will be assured of never forgetting a bill – nor your client forgetting one.
Taking that thinking a step further, you can let automatic invoicing and automatic billing really work for you by collecting late fees for unpaid invoices. Obtaining a free software that allows you to get that set up will give you peace of mind, but also clients will be aware of their due dates, and any lapses in payment will actually result in you being compensated – all without you having to spend your own time or money.
On the flip side of that thinking, you can consider incentivizing early payments from your clients as well. As you are actively discouraging late payments with the added fee, you can work to encourage payments made ahead of a due date by offering a modest discount. Just as you are, your clients are looking to save money where they can and so offering them a bit of money off while also ensuring you get your cash flowing in.
In fact, simply accepting and prioritizing online payments over more traditional and outdated forms, such as checks or money orders, will go a long way for ensuring your clients pay and more importantly pay on time. Online invoicing is not only easier and more trackable, but it is also free for your customers and does not involve them having to go out of their way to pay you. By integrating your invoicing with automatic – or, at the very least, online – paying options, you will be to make those on-time payments and keep your cash flow running evenly.
Increase Your Pricing
Whether this is an across the board solution or just best applied to certain items of offerings, even a modest raise in pricing can go a long way. You should be upfront with your customers, of course, and give them a heads-up and also do enough market research to ensure you are not hiking up costs by too much.
It may seem like a deceptively obvious solution, but if you are not bringing in enough cash, this is a pretty concrete and assured way to up the amount of money flowing in.
Streamline and Upgrade Your Invoicing
By merely automating your invoicing, you can virtually guarantee a huge decrease in errors and potential misses or omissions.
There are free invoicing tools that offer the ability to track your accounts and your billable expenses and get them out to your clients in a much more organized and efficient fashion. You’ll also be able to use it to track and analyze important data to be fully in the know such as which of your clients pay on time, who owes you money, and which of them are consistently behind on payments or making late payments.
By stepping up the professional look and feel of your invoices, you up the professional credibility of your business. As you present a polished process to your clients, their faith in you as a business will be evident. And by having your invoicing process live online and be integrated automatically, you take back the control of managing your money, and you can stay on top of collecting what you are owed.
A professional invoice should be clear, concise, and easy for the client to understand – and it should also come promptly from you. By utilizing automated software, your invoices meet all of the essential criteria.
Utilizing an invoice system will also help you with those early payment incentives and tracking late payments!
Look Into a Short-Term Business Loan
Fairly easy to be approved for, short-term loans also tend to be funded pretty quickly – in fact, many come through in as little as one business day. The one bit of a drawback is that they typically have a higher interest rate (APR) due to the shorter nature of their lifespan. To that end, though, the total cost of all the capital can actually be less expensive than a longer-term loan – the higher APR being balanced out with a smaller cost of capital. Short-term loans tend to run about 3–36 months so they might be just the thing to get your cash flow back on track.