The Internet is brimming with unrealistic advice for getting rich overnight. Although such schemes look impossible to a rational adult, there are still people who fall for different online frauds. This is why SMB owners should expand their knowledge of small business finances, so as to keep it liquid and profitable. You can start learning by reading our tips.
Payments through direct withdrawals
Many business beginners fail into a trap called trust. The issue of trust is a delicate one. First and foremost – you can’t believe your clients if you’ve never worked with them before. So, if you want to ensure you don’t get fooled, establish certain mechanisms that will always provide you with enough cash for your business expenses. One of the most convenient means for SMB owners to protect their rights is a direct debit payment. If you opt for this payment solution and make such an agreement with your client, you can withdraw the agreed assets directly from their account on the payment due date.
Special discount packages
Before getting judgmental towards people who are late with their payments, think about their reasons for a minute. If they’re also startup beginners, just like you, you can understand their condition. Maybe their debtors don’t pay them on time, which is why they’re late with your payments. Therefore, instead of criticizing them, try to devise a win-win solution. For instance, abandon the hourly rate payment policy and offer your clients special discount packages and fixed rates per project. If you show them your good will, they’ll find a way to follow suit.
Nevertheless, don’t use this cash-flow method with first-time clients, but only with your loyal customers.
Modernize your accounting
A piece published by Vice says that paper checks are still one of the main payment options in the USA. Well, you should avoid offering those means as an alternative to your customers. Firstly, it will cause significant delays, undermining the cash flow. Secondly, if you opt for remote online accounting, so as to reduce the staff expenses, checks will be inconvenient for your bookkeeper.
Because of these reasons, abandon checks and move towards modern payment gateways, such as PayPal, Amazon or other reliable payment systems.
Proactive invoice policy
The question of trust and business loyalty comes to the spotlight again when talking about your invoicing system. Sending invoices too late can leave your business without enough assets when your expenses are to be charged. And even if you invoice immediately, your debtor might ignore your claims. What you need to do, if you can’t get what’s yours, is use the invoice finance options and improve the liquidity of your business. The benefit of this move is two-fold. Firstly, you’ll retain your cash flow. Secondly, you won’t have to deal with an unreliable debtor anymore.
Focus on liquidity
Business beginners are often carried away by all those shiny figures that promise easy money and getting rich overnight. If you’re wise, you won’t fall for that. It’s the cash flow that will keep your business alive, not the profit margins. Your liquidity has to be the main goal in the beginning of your business quest. So, accept projects and deals with lower profit margins than too-good-to-be true hustles.
He who has cash, has the power. In order to keep your balance sheet in the positive zone, make strict rules about your payments and list all the exceptions, i.e. the long-term clients who deserve a flexible payment policy. For all the others use the methods presented in this piece.