Cash Flow Is The Lifeblood of Every Small Business

Editor’s Note: This is a sponsored post.

In the United States, small businesses comprise 99% of all businesses and employ 60 million people, or nearly half of the private workforce. Despite the prevalence of small business, did you know that just one-half of all small businesses survive five years or more, and that just one-third make it to 10?

Lack of access to capital is one of the leading reasons why small businesses fail. In fact, one in three small business owners says that access to capital is the most challenging business problems they face.

Given how critical it is for small business owners to successfully raise capital, produce consistent income from quarter-to-quarter, and manage expenses daily, becoming an effective money manager—in addition to developing capabilities in sales, marketing, and operations—is critical to bth short- and long-term success.

Be Smart About Your Deductions

If your business receives payments from customers on time, but cash flow remains a consistent issue, the cause could be the amount you pay in quarterly taxes. While no one is exempt from paying taxes, the amount you owe each quarter depends on the deductions you are able to claim. Without enough deductions, you will remain in a higher tax bracket and thus owe more. If you’re not certain that you can claim an expense, consult a certified tax specialist today and start saving money tomorrow.

Offer Structured Payment Plans

No matter how great a company’s cash flow is, it pays to offer customers options when faced with a large scope of work, and an even larger price tag. Business runs on trust, so don’t be afraid to trust your customer to make regualr payments.

When you’re doing a large job, consider offering your customer the option to make a downpayment and then more payments over time. Many companies find out from past experiences that allowing their customers to make smaller monthly payments is almost a guarantee on their return. It also leads to more business, as people like to do business with other people who treat them well.

Establish Personal Relationships

A survey released by PaySimple a few years ago found that 80% of small businesses struggle with receiving payments past their due dates. One of the best ways to get customers to pay your invoices on time is to establish a personal relationship with the purchasing officer and the accounts receivable manager. These are people to know on a first name basis, people to send holiday cards to, and so on.

Another effective approach is to set an automated reminder email that notifies your contacts when a payment is late. When these emails first arrive, it may upset the customer, or jar them awake. It’s a good idea to follow up with a personal email that clearly states how and why the automated emails are sent out.

Take Your Contracts Seriously

It’s hard to run a profitable business of any shape or size. It’s even harder whrn clients don’t pay. The National Federation of Independent Business survey revealed that approximately 64% of the small businesses have clients who didn’t pay invoices for at least 60 days. There’s also a number who refused to pay at all. When the worst happens, and a client refuses to pay, you want to have a reputable business litigation lawyer in your corner. The right legal partner will help guide your expert use of contracts and help ensure that you receive everything agreed upon in the initial contract with the client.

Make It Easy To Pay

Small business owners need to get paid. The faster the better. Customers, for their part, want the ability to pay their bills online. By enabling customers to pay instantly through an online payment platform like PayPal or Stripe, you help to make it more convenient for customers to pay, and pay today. Online invoicing and payment platforms also allow customers who may be waiting on funds themselves to pay using a credit card.