Keeping your small business financially sound can be a little overwhelming at times.
From paying employees (if you run more than a one-person show) to ordering office supplies to meeting office space rent and utilities, it sometimes seems like the bills will never end.
That said you have to make sure that you maintain a handle on all these financial needs. If you don’t, things can quickly spiral out of control in a hurry.
So, where do you turn for help in order to keep your finances under control?
Customers Must Pay on Time
For starters, it is imperative that your customers pay on time.
As an example, say you have 15 clients you provided goods and/or services one day recently. When it comes to them paying you, 14 paid you on-time, either in-person or online. That one customer who did not pay on time gets invoiced a second, perhaps even a third time.
The following day, another 15 clients were provided goods and/or services from your small business. This time around, 13 pay right away, two are sent multiple invoices over the next few weeks.
Even though it may seem like you’re getting the bulk of your customers to pay you reasonably quickly, those who are not can slowly begin to add up. As you don’t receive those particular payments, you have essentially provided goods and/or services for free. Meantime, some of your bills may go unpaid or have delayed payments since you don’t have all the projected revenue coming in that you once thought you would have.
For larger-sized companies, not receiving on-time payments isn’t quite the major issue it is for smaller businesses; especially since the former typically have more capital with which to rely on.
If your small business has been getting the shaft at times when it comes to payments, you need to do something about that sooner rather than later.
One of the ways to improve such a situation is by making sure your invoicing is not coming up short.
You can use free online estimate templates to not only get compensated in a quicker amount of time, but also to keep your small business better organized.
Also remember to:
- Deal directly with customers – Some customers undoubtedly will have financial issues that prevent them from paying at the time they purchase a good or service from you. This is typically common in the healthcare arena when patients visit a doctor or urgent care. They are oftentimes billed for the services (with the bill first going through insurance providers to see what is and isn’t considered a covered expense). Once it is determined what the patient owes, he or she is then expected to pay that amount. Some medical practices will work out a payment system, where patients can pay what they can afford at any given time. The problem oftentimes becomes when the patient decides to no longer make payments for whatever the reason may be. Do your best as a small business owner to communicate with the patient and have a payment plan in place that works for both sides;
- Don’t write off missed payments – While $25 here or $40 there may not seem like a lot when it comes to missed payments, the money doesn’t take long to add up. Before you know it, your small business is owed hundreds or even thousands of dollars. Over time, those missed payments can mean the difference between your business doing well, doing so-so or even getting itself into the red financially. If you have to go the collection agency route, do it. Yes, you will pay a fee for their services, but you need to recoup as much of those missed payments as possible. Remember, working out payment arrangements with some customers who are struggling financially is one thing. Letting them essentially get away with free services is a totally different thing, one that could ultimately doom your small business.
So, is your small business getting paid on time or are you counting the weeks and even months to finally get the money that is rightfully owed you?
About the Author: Dave Thomas covers small business topics on the web.