Posted on: 25 June 2018Share
If you feel like you are a little lost when it comes to finances and your small business, or if you feel like you could be doing better with your finances, you can still get your business back on track. You can help get your business back on track even if you have been operating for a few years.
#1 Create Accountability for Payments
If up until this point you have been allowing customers to pay invoices without any consequences for late payments, things need to change. If you are regularly not getting payments from customers on-time, this is negatively impacting your ability to do business.
Set a firm policy for sending out invoices and expected payments and stick to it. For example, do you send an invoice when an order is placed, when it is shipped, or when the customer receives the order? Determine when you want to send out invoices and do so in the same manner for all of your customers.
How long do you give customers to pay? Do you give customers 30 days and then impose a fee? Does the fee rise over time? If you don't already, give each invoice that you send a due date and include on each invoice the consequences that customers will face for payments that are late by a certain number of days. The consequences could be a fee or rate increase, or even being sent to collections.
You can also offer an incentive for paying invoices in a timely manner, such as a 5% discount on the next order for all invoices paid within two-weeks. Sometimes incentive works better than punishment.
Having a firm rule set-up for invoices will help you keep the cash flow going that you need for your business.
#2 Create a Daily or Weekly Budget & Monthly Minimum Profit Goals
The next thing you need to do is stop winging it when it comes to spending money for your business. Sit down and set-up a budget. You can set-up a daily or a weekly budget, but make it small. A monthly budget is great, but may be too big for you to track and make sure that you are following each week. A weekly budget will give you more of an opportunity to check in and make sure that you are on track.
Look at your overall expenses for a month and set a minimum profit goal. Setting minimum profit goals can help you establish how much money you need to make each month, and can help you determine where to allocate resources each month in order to make sure that you meet your minimum profit goals.
If your small business is off track, set-up a weekly budget, establish minimum monthly profit goals, and change your process for collecting money from clients. A small business accountant can help you with this and other tasks that will get your small business on more solid financial footing. Look for local companies like Universal Accounting and Financial Services, Inc to help you fill the accountant for your needs.