⏱ 2 min reading
We feel it’s quite a common reality that very often people decide to have their own business, not because of the money, but that they eventually decide to stop the business because of it. When you really stop and think about it, that is quite a depressing thought. People have big dreams and ambitions which are eventually killed by money. The thought that when you have an off-month you might need to look at your emergency fund or put yourself in debt can feel overwhelming. Cash flow issues are no joke, which is why these tips below might make it easier to stay on top of things.
Cash flow ultimately means all the amount of money that’s coming into your business versus all the amount of money that is going out of your business due to payments. Payments need to be made no matter what so let’s first look at the incoming stuff.
1. Ask your clients if they can pay sooner
You might feel weird about this and we can understand why. Truth be told, whether or not you’re going to do this will depend on what type of business you’re in and what kind of relationship you have with your customer. In some industries, it’s normal to have a shorter period in which your clients can pay. In addition, only you can determine what type of relationship you have with your clients. With good clients, you might feel more inclined to ask them if they could pay a little earlier. But overall: you don’t know until you’ve asked. Sometimes people may surprise you!
2. Know the ins and outs of incoming payments
When it comes to incoming payments, you should be able to tell how much you’re going to get paid. However, it’s also important to know when you’re getting paid. Clients may use different ways to pay you and sometimes it may take a little longer for a payment to arrive in your account. If you know when payments are due to come in, you can estimate better what to expect and have a better overview.
3. Synchronize income with expenses
It sounds so simple. And it really can be, depending on whether or not this is doable for you. If you have a good client who mostly has high invoices, you might want to allocate that part of your income towards a big chunk of your expenses. Vice versa – if you have a smaller amount, try allocating them to some smaller bills you need to pay. Also, if your expenses don’t really match with your income you can also try if you can get a longer payment period for your own expenses.
4. Getting ahead
We’ve talked about it before. But planning honestly can give you so much peace of mind. If you are able to get an entire month ahead, your worries about paying all your expenses are a thing of the past. By getting a month ahead, you’ll guarantee you have gathered enough from your income in the previous month to cover the new month.