By Patty DeDominic
Cash-flow problems arise often when clients get behind on fee payments. The best way to avoid this problem is to get paid up front or have a more enforceable agreement about when fees will be paid.
Good quality control is important so that clients can be sure they are getting the service for which payment is due. Cash may be king, however, finding options is queen
It may be time to consider increasing prices to maintain a consistent revenue stream. Or, it may be a good idea to start trimming operating costs as well.
Look into ways to lower the cost of fulfillment by automating business systems. Avoid wasted labor expenses for things that can be automated. Create check lists and protocols to provide staff or substitute workers with written or automated documentations, macros and automatic responders to save time and money.
Don’t reinvent the wheel for every new vendor or hire. Provide a video orientation for them. Provide self-serve and frequently asked questions on the company website. Also add phone systems that will keep hiring to a minimum. (For example: “Press 2 for hours and directions to our location.”)
Here’s another idea that might help cut spending: Perhaps a business can use a barter system or receive in-kind services in lieu of a fee or partial fee.
It’s a good idea for businesses to keep close watch on their cash-flow shortage as opposed to operating losses.
While some small businesses use credit card companies, it may be a better idea to get a line of credit from your existing bank before a cash-flow crisis occurs. Your bank usually will listen to your needs at no extra cost instead of sending bill like an attorney or accountant.
Businesses should project their spending, plan and budget accordingly. Watch for recurring expenses. Prune clients. Businesses should ask themselves, “Are we just spending or investing?”
In the long term, strategic planning will pay off.