5 Tips That Will Significantly Improve Your Cash Flow
Consistent cash flow is vital for any business to survive. This is especially true for small businesses and freelancers. There’s no single solution to fixing cash flow issues. That said, there are plenty of tips and tricks that you can easily implement that will get you paid consistently.
Here are 5 tips that will significantly improve your cash flow:
Set Clear Expectations Early On
Many freelancers and small businesses like to operate without contracts and agreements when working on small projects. Especially when you’re just starting out it’s imperative that you set clear expectations with your clients. It may seem unnecessary for small gigs but it will set the tone for future jobs and clients.
The contract should go over clear deliverables from you as well as expected payment dates. Should either party get confused at any time they can always reference the contract for clarity.
Build Strong Client Relationships
Acquiring new clients and or customers is time consuming and expensive. Instead of constantly searching for new clients try and spend time nurturing your current relationships. The better the relationship with your client the less you’ll run into issues, especially when it comes to payment.
Here are a few ways you can build stronger client relationships:
- Make an effort to spend time with them outside of the business world. Take them to dinner or to a baseball game. This is a very common practice in sales and it’s proven to work very well.
- Make compromises and be flexible. It’s good to stick to your guns, but client’s will always appreciate it if you are a bit flexible on your terms.
- Ask your clients for feedback and suggestions. This will show your client that you value their opinions and are constantly looking to improve their experience.
- Send your client’s personalized invoices. This is a great strategy as it separates your bills from the rest and gets you paid on time.
Make Sure You’re Engaging With The Right Contact
Depending on your client, the person whom you will discuss payments with will differ. For example, if you are dealing with a small business you’ll likely be engaging with the business owner. If you’re working with a mid to large sized company you may need to engage with the finance department.
When you start a new project for a client make sure you have the contact information of the individual authorized to complete payments. You need to cut out as many middle-men as you can when it comes to communication, especially when it comes to getting paid.
Accept Payments Online
The more convenient it is for your client to pay the quicker they will do so. Find an online payments platform that allows you to send invoices to clients electronically. Many of the top payments companies will also offer additional features on top of online invoicing like recurring/automated payments and reporting. These features all bundled together will save you tons of time and money when it comes to billing customers and keeping track of finances.
Be Strategic With Your Invoicing Terms
Most invoices will have the payment terms listed on the invoice. Many business owners overlook invoice terms as a factor in payment turnaround. If your client doesn’t understand what they’re billed for they are much less likely to pay the invoice on time.
Here are a few strategies you can implement when it comes to invoicing terms:
- Avoid jargon like “net 30 days”. In fact, you should try to use dates as opposed to time frames. “This invoice is due no later than June 15th” is much more clear than “This invoice is due no later than 15 days”.
- Implement late payment penalties. As long as you’re clear about late fees upfront this will significantly decrease the number of late payments.
- Be respectful and polite. A simple please and thank you go a long way when drafting your invoice. Make sure you include these on all of your invoices.
Keeping a steady cash flow is very dependent on making sure payments come in on time. If you’re having issues with your cash flow, I highly recommend implementing these strategies if you haven’t done so already.