One of the most common issues that small businesses face, especially those owned and run by women, is cash flow management. Up to 82% of small business failures are due to poor cash flow, and women-led businesses are commonly underfunded. Fortunately, there are a few key ways you can improve cash flow management in your business to keep your company running efficiently.
Set deadlines for invoices and stick to them
Before you take on a new supplier or client, it’s really important that you establish your payment terms. Make sure your terms are clear and in writing and that these terms include deadlines for your invoices. It’s understandable not to want to be the bad guy when it comes to invoices, but late payments can sink your business if you’re not careful. Make sure new clients or suppliers know when their invoice is due. If you need the money ahead of time to cover necessary expenses, consider asking for an initial deposit and then asking for the rest of the invoice later when deliverables are made.
Consider invoice factoring
Sometimes your suppliers and clients may still be within their contract guidelines when you run out of money. This moment between invoices can be scary, especially when you have employees to pay. About 58% of all U.S. workers are hourly, non-salaried employees. Invoice factoring can be helpful in these scenarios when your cash flow is up in the air.
For a small percentage of the invoice itself, invoice factoring services will pay you the invoice you’re due in advance so you don’t have to wait for suppliers or clients to pay their dues. This can be handy for maintaining a steady cash flow schedule so you don’t have to be caught off-guard by surprises.
Take advantage of software
There’s a reason why content marketing costs 62% less than outbound marketing and is three times more successful: it uses technology to do the heavy lifting. Using software to monitor your cash flow is a great and inexpensive way to keep track of your money. By using accounting software such as FreshBooks, you can record transactions automatically and cut down on time lost by recording these transactions by hand. What’s more, you can keep all of your spreadsheets right in the cloud where you can access them at any time.
Cash flow management isn’t easy. But with a few simple tips, you can make keeping track of your finances a little less stressful.