Although there are many ways to manage the cash flow of a small business and it is, of course, vital to becoming an expert in these if you intend to stay in business, all of the advice for keeping cash flowing becomes redundant once you find yourself amid a struggle for revenue.
One of the most important things that you, as a small company owner, have to take care of is your small business invoices. Huge amounts of money are thrown away every year by small businesses simply because they are not running their financing efficiently. This is also the area of small business where entrepreneurs struggle most since you cannot work without money-cash flow is the lifeblood of the business.
Small mistakes and lack of knowledge can be sources of serious problems and costs. However, you don’t need to be a professional economist to know how to avoid them.
Here Is Some Advice That Will Help You Manage Healthy Small Business Invoices.
- Establish A Sound Financial Budget. The first thing you will need to do for your business is to establish a sound financial budget. Open a special bank account for your business only. Try to keep your business transactions and household accounts completely separate. Do not borrow from one to another, no matter how tough the going gets. One of the biggest mistakes is to mix business with household finances.
- Keep Your Bank Account Under Control. It is also important that you keep your bank account under control. You may have a bank consultant and a bookkeeper, but you should also have some you’re tracking the quotes and work in progress as well as sales invoices. Your bank balance should agree with your bookkeeping.
- Invoice Discounting. Like factoring in that it releases a similar amount of cash back into the business with outstanding invoices used as security, but usually a confidential service without customers aware that financing is being used. Unlike factoring, business will retain its credit control management.
- Have Separate Accounts. With a corporate bank account, you can separate your company’s invoices from your finances. Get a business credit card to help track expenses. Most major banks offer cards with points, cash back, and other benefits. Thus, no reward will escape you. Enhance your company’s credit record, make sure you do not miss any payments, and free up cash.
- Sort Your Receipts. Instead of letting your receipts pile up on a corner of your desk, get an archive box and folders to store your bills and other documents. Organize your documents into broad categories – office supplies, transportation, entertainment and more – and clean up your wallet and briefcase at the end of each week, so you do not lose anything. It will be easier to find you when you file your tax return.
- Do Not Give Credit Terms. Your income depends on your agreement and sales skills. You must ensure that clients know that payment is required on completion, of course, it’s much better if you can get part or full payment up front. You must discuss, write down and agree on terms of trade, supported by the contract which will protect you. Keep under control when invoices are due to be paid.
These are the ways to have your invoices as frequently as possible, and not to lose your money.