I’m sure the heading of this post may have tweaked your curiosity. For some it may of sounded a bit malicious, however it’s not.
In your business, especially if you’re a single business owner, cash flow is everything. It’s about money money money. It’s what helps you live and operate. I would almost compare it to the pulse of your business. No pulse, no life!
However for must of us we are always doing the dance with our receivables, chasing down overdue payments or waiting on cheques to arrive. I’ve seen and experienced a lot of this over my 15+ years as an entrepreneur in Canada. Here are some tips I’m wanting to pass on that I’ve learned.
Tips for getting paid
- Develop a Process – Know how you’re going to be paid for the work you do before you even do it. Have that discussion with your client, put your payment policy in your contracts, website or even email signature. It’s about setting the expectation in advance. For me I require a 50% prepayment on all projects before they begin. This allows for cash flow to carry through the project.
- Make it Easy – The reason most payments are late is because the sender has to do many steps from receiving your invoice to sending your payment. If you can make it easy to pay, you will get paid faster. When I went from only being paid in cash or cheque to accepting online credit card payments, my receivables were down by 60%. Payment timeframes decreased. Why? Because I made it easy for clients to pay. To do this use an online invoicing system like Freshbooks or Quickbooks Online. If you’re a business that goes out on the road and sells in physical locations Square is a great option. It all runs from your mobile device and allows you to create online payable invoices.
- Embrace the New – Gaining popularity for payments is email money transfers or e-transfers for short. Anyone with online banking (and who doesn’t have that), has the ability to send money via email transfers. The best part is it doesn’t cost you anything to receive it. It’s secure, it’s instant and it’s fee free. For the sender they pay $1.00 to send one (some banks don’t charge).
If you don’t manage your receivables and get your cash flow constant, it’s a make or break for most businesses. Pay attention to this and give it your full attention.