Startups often suffer from uneven cash flow, which can make it a challenge to fund operations while you’re waiting for that big check to arrive. So here are a few ways you can make your cash flow smoother.
If you don’t accept credit cards, you should. It’s easier than it used to be, and your customers will appreciate it too. Heck, accept PayPal while you’re at it.
Send out invoices more often, say twice a month, so you bill as work is completed instead of at the end of a big contract.
Automate your accounts receivable and billing functions. Plugging your daily activities into a tracking tool can more accurately capture billable time and speed invoicing. Harvest, Zoho and Freshbooks are a few services that might help.
Consider outsourcing routine accounts receivable functions, such as calling customers to confirm that invoices have been received. These services aren’t collection agencies, so they won’t hassle your customers, but they’ll distance you from the “bad cop” role.
Finally, review your pricing structure occasionally, say quarterly or annually. If you think your customers might balk at a price hike, offer them discounted retainer payments that can lock in your current rates for an extended period of time. That way, your loyal customers get a break while new ones pay closer to market rates.
Adapted from 5 Ways to Boost Your Small Business Cash Flow by Joe Taylor Jr. at Small Business Computing.