We’re on a mission to help you improve your cash flow. To succeed, we really need to get you thinking and dealing with your numbers, proactively. Can you do this? Of course you can!
Positive cash flow is the ultimate encouragement for business owners to look at their money and be excited about how well everything is going. The reverse, however, has quite the opposite effect. When cash flow is down or “not good,” we’re in a state of pain. It’s stressful and uncomfortable to even think about looking at the numbers.
Conquering your numbers anxiety when cash flow is down will save you a lot of grief in the long run. Why? Because awareness allows for better decision making and brings about the change in your business that will fuel your activities with less or no pain going forward.
Would you agree with the following statement?
The more familiar I am with something, the easier it is to deal with.
…We thought you might, so here are a few ways to both stay familiar with your numbers and experience positive cash flow more often, if not all the time.
1. Separate your profit from your operating funds, and manage expenses proactively by implementing the Profit First Method.
The Profit First Method calls for regularly scheduled transfers of funds, review of expenses, and updates to percentages of funds being allocated. Consistency is key, so add a recurring event to your calendar to maintain the Profit First Method. Remember, with Profit First, you’re relying on bank balance accounting, and your cash flow will improve through taking a proactive approach to your money:
Income – Profit = Expenses
Implementing an entirely new system can seem overwhelming. You can start by just opening up one new bank account, for profit. Open that account at an entirely different bank where ‘it’s out of sight / out of mind’. Then move a minimum of 1% to the profit account every week. Operating on just 1% less than usual is doable for anyone. Pro-Tip: Google Calendar has a “Goals” feature in the smartphone app – it will keep nagging you to keep to your Profit First goals.
2. Focus on your A/R processes and be aimed at getting paid faster.
If you are in a business where you’re billing after the fact with net 30 terms, rather than automatically charging Credit Cards as soon as the service is performed, you’re missing an opportunity to improve cash flow and reduce stress.
Whether you are billing hourly, or by fixed fee for a project, you have just as much need to collect money up front, prior to delivery of your services. You can charge a certain percentage up front and then in increments until the job is done. Or collect a retainer and bill hourly against the amount collected until it’s time to repeat the process. This improves your cash flow and aids your business operations.
3. Install apps on your mobile device to aid with items 1 and 2 above.
QuickBooks Online (QBO) is one of many applications that aid business owners from a mobile device. The QBO app will allow you to look in on expenses, so you can be thinking about Profit First adjustments that may be needed (item 1), no matter where you are, so long as you are able to access the internet. Additionally, you can look in on your A/R numbers while on a job site (item 2). This is powerful because if you need to ask for another retainer before you run out of funds, the information will be at your fingertips! The app will help you get paid upfront, faster, while saving you time. Boom! Improved cash flow.
Also, check out CashFlowTool. They “hate it when businesses fail”, and so do we.
Contact AccountSolve if you need help implementing the Profit First Method, or developing your good bookkeeping habits/routine. Also, don’t be shy, if you’re looking for assistance with maintaining your Accounts Receivable. We’d be thrilled to be a part of your journey to better cash flow.