When starting a new business, money matters are the most crucial part of ensuring growth and success. From keeping your cash flow moving to verifying the accuracy of billing and getting paid on time, money management is something on which you must keep a firm grasp.
The skills and work that go into effective money management can be a challenge, and often the level of competence in this area can make or break a business. Without clear guidelines, it is too easy to fall into bad habits which will negatively impact a fledgling company. You will need to establish some rules and procedures early in the creation of your business if you want to succeed.
Here are some money management tips for first-time business owners:
Create a cash flow budget. This should be your very first step in establishing and maintaining good money management skills. A good budget will help you to pay and manage your expenses comfortably and to keep an eye on company revenues at all times. Keep this budget updated, continually managing to reflect any changes, and be sure to include forecasts for sales, accounts receivable, and operating expenses. Keep those expenses below your income so your profits don’t slip away!
Always pay your bills on time. This one may seem self-evident, but it can be easy to slip into a pattern of paying late. As a business owner, you understand that when it’s your cash flow at stake, the lateness of customer invoices can be catastrophic. This flows both ways. If you’re not making a commitment to paying each bill as soon as they come in, this will spell disappointment for your business too. This diligence will pay off when you find that you’re avoiding some of the pitfalls that follow overdue payments, such as late fees on loan payments and credit cards. Monthly reminders are an excellent way to manage and maintain your business bills.
Provide varied methods for payment. By helping your clients to pay in more diverse and flexible ways, cash flow will be smoother, and you won’t have as many overdue accounts. Electronic payment methods are an excellent and secure method to allow your customers to pay instantly, safely, and from the comfort of their own home. Take advantage of some of the great online payment options for your business, ensuring low fees for your company, and easy and quick ways for those bills to be paid on time. The advantages to these electronic payment options far outweigh any disadvantages, and allow for more freedom for supplier and consumer.
Create an effective collection process. We all know that sometimes those bills just aren’t being paid. And this is when it is crucial to have a collection process which lays out clear steps for customers whose invoices are past due. Bear in mind that this money is owed to you, and so the importance of securing it is high. There is no need to be rude or aggressive if you have a plan in place which touches on the importance of balancing tone and firmness. Ramp up those measures as a bill continues past 30 or 60 days, but stay on top of this process through to the end. By establishing and communicating clear guidelines for overdue accounts with your customers at the start of a job, you will have fewer issues and room for disputes, and the likelihood of being paid on time rises.
Make invoicing a priority. Your collection process is not the only part of the invoicing process to formulate and prioritize. Make sure you are sending invoices the moment a service is completed–with your payment terms included–and then follow up. Outsourcing these steps is an excellent method to standardize accuracy and set reminders for each, individual account, and an electronic invoicing program can easily meet these needs.
Invoice Tracker offers automatic email reminders, which can be customized and personalized, which will follow up on those unpaid invoices on your behalf. By synching with your existing accounting software, these emails will stop the moment a payment is made. The personal touch allows for the appropriate tone, maintaining harmonious customer relationships while still applying an appropriate amount of pressure. Reporting insights will allow you to keep an eye on how your business is doing, and you can watch your business grow as cash flow is maximized with the aid of automatic overdue notices and reminders.
Use Invoice Tracker as a part of your money management toolkit, and get paid faster. Try a free 30-day trial today.