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3 key steps to improve your cash flow

How to make sure you are being paid for the work that you perform.

3 key steps to improve your cash flow

Do you have cash flow issues in your business? Have you taken steps to implement a streamlined process to collect your debts? Do you think that the process is too difficult and therefore never address it? It might be the case that when you are a great technician at doing work, you are not that great at the other elements of your business.

One of the key areas that may be missed is collecting your debts. It is quite common for great technicians to just believe that someone will pay their bills.

Unfortunately, this doesn’t happen all the time and there are a few simple steps you can take today to stop it from happening to you.

  • Get paid before you do the work

    The simplest way to avoid the problem of not being paid for your work is to get paid before you do the work. Making and adhering to a strict rule that you won’t take on any new work until payment is received will greatly assist your cash flow while being the simplest thing that you can do to fix this problem.

    In some businesses you are legally precluded from doing this, such as law firms, however you should have a trust account that your money can be paid into. If you do this, then you should have an air-tight contract with your customers that allows you to take the money once the work is finalised.

  • Strict payment terms

    If you are unable or unwilling to have your clients pay you upfront for the work that you do, then you must have strict payment terms. This should be no more than seven days. You also need to have a debt collection process in case they do not pay you in that time frame, that follows up with the client regularly to ensure that you get paid.

  • Enforcing boundaries

    The last step that can be beneficial for a lot of business owners is to enforce the boundaries that you establish in getting paid for the work that you do. Most of the time people are happy to pay before the work is performed but if they do not, then you should be concerned.

If you let a client or customer get away with not paying you or delaying payment for some time, you are setting a boundary that lets them pay you later and later each time. You need to enforce the boundaries and if you are not willing to do so, employ someone who can.

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