Managing your cash flow can be the key to keeping your business financially stable in an unstable industry.
These tips can prevent financial surprises in the future.
- Don’t use your cash as a financing tool. Home improvement business owners often make the mistake of using their anticipated cash flow from future jobs as a way to finance current projects. Operating in this manner can expose you to financial instability in the case of downturns in the market or an unexpected drop in business.
- Establish deposit and billing policies. By creating policies for your clients such as requiring a deposit or offering financing, you can protect your assets and avoid future legal action should clients choose not to pay.
- Speed up invoicing and payments. Submit electronic invoices to your clients to reduce costs and expedite the process. Include the terms and policies with the invoice and send payment reminders as the deadline approaches. Consider accepting credit cards and offering financing to give your customers more convenient ways to pay for their project.
- Learn some basic accounting. Knowing where your cash flow is coming from and where it is going for expenses can make a big difference in the stability of your business.
- Have a backup plan. Attempt to have at least a six-month cash flow reserve and to project four to six weeks of income in order to have an understanding of your business’s financial standing.
- Review your sales cycles. Analyze your balance of large and small project schedules to determine how to diversify your workload in order to maintain an optimal cash flow.
If your business is struggling with cash flow, customer payments, or maintaining a steady process for the execution of your projects, offering consumer financing can be an answer to your problems. Offering customers a low monthly payment can be received much better than making the sale on the total cost of the project.
To learn more about offering financing to your customers, click the button below.
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