Restricted cash flow is always a symptom of an issue in your internal money management practices.
Similarly to getting a diagnosis at the doctor – it’s often worth it to dig in and see if you can’t find out what’s causing the sickness you’re experiencing.
Here are a few ways to evaluate where your restricted cash flow may be coming from:
- Accounts receivable practices
Do you wait to buy furniture and decorative items until they’ve been paid for by your client, or do you jump the gun and make those big purchases prior to payment?
As uncomfortable as it can be to hold out on buying furniture until your client has paid the invoice, it’s an absolutely necessary practice to implement.
We always tell our clients “You’re not a bank. You can’t buy furniture your client hasn’t given you the money for.”
- Asking for money
This one can be really tough, and it’s connected to the previous point. If you’re not firm with your client about needing their payments in order to do your work, they won’t know why you’re waiting around, and then both parties could end up frustrated.
In addition, it’s crucial to become comfortable with asking your clients for the money they owe you because it’s tied to the way you value yourself as a designer. The more you take your work seriously, the more your clients will, and the more you’ll believe it.
- Not billing because of time
It’s easy to say that you hate invoicing or don’t have time for it. Take some time to evaluate whether that’s the real reason, or if it’s more connected to not wanting to ask for money.
- Not billing for changes in pricing
Prices for materials and supplies are ever-changing, and ever-increasing. It can feel awkward to increase your prices for fear of how your clients might react. If you set up expectations with your clients up front and remain transparent about costs, you can set yourself up for success in those conversations.
- Charging too little
Once again, this issue has more to do with your perception of the value of your work than anything else. Part of the reason Profit First is so valuable is that it allows you to give yourself the salary you deserve.
- Spending too much
It can be easy to forget to pay attention to overhead expenses, so you may be spending money in areas you’re not even fully aware of! It never hurts to check your spending and make sure you’re not paying for things needlessly.
Digging into the health of your business and identifying problem areas within your finances can be overwhelming. Account Solve offers guidance from Certified Profit First Professionals so that you don’t have to walk through the journey to financial health alone.
Schedule a call today to get started!