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Updated 24/11/2021
Having a great business idea with the vision to see it through is not enough. If you can’t get paid, then your company isn’t going to survive. You will not have a business for very long if you don’t take care of the bottom line. In this article, I will give you key issues that you need to address in your business to keep your finances on track and keep the cash flowing.
Don’t forget to get paid
Firstly, you need to get paid you the value that you deliver to your clients. It is OK to offer value to leads and prospects to gain authority and build trust, but it is vital that you transition to paid work promptly. It may be that you forget to charge. You can be so busy that you don’t write down what you have done for a client and then it is too late when you finally realise. The solution to this problem is to make sure that you write up the work that you are going to do for a client before you start the job. Not only does this help you to remember what work you have done, so that you can get paid, but also everyone knows what to expect.
Losing money to Scope Creep
The second way that you can lose out on financial recompensation is through scope creep. Scope creep is when you start a job, with or without a proposal, and during the project, you end up doing extra work that in the original plan. It is straightforward to get dragged into doing additional tasks, but even small ones can add up. To make sure that you don’t end up working for free, you need to ensure that the original proposal is updated if extra work is required. Get the new job, and additional costs agreed with the client before you commit to doing the work. Updating the agreement works both ways, as well as you miss out on payment for work, your client will not want to receive unexpected bills.
Track everything
You need to track the time that you spend accurately then you can assign costs to each task as well as the time that you spend on each job you need to make sure that you account for any additional materials that you use for the work. Have a system in place to keep everything related to a task in one place. If you have all this information collated, then you can generate your invoices automatically, knowing that you haven’t’ missed anything.
Chase your money
Even when your customers love your business, they can also be busy themselves. Sometimes, you won’t get paid, even when you have sent an invoice. So, you will need to chase your payment. Chasing up invoices can take a lot of your time. In the same way that having a consistent process for your invoicing helps you to get paid for all your work, having a system for chasing invoices is equally as important. Sending monthly or annual statements, to your clients, as well as, emails or letters to pursue payment of invoices, are processes that should be automated. You can create templates for invoices, statements and chase letters, so, that your communications are consistent and professional.
Find your best clients
When you get started, you see everyone as a great potential client. Gaining any client would be brilliant. However, have you realised that you likely make the majority of your profit from only a handful of clients?You may have heard of the Pareto principle, or 80/20 rule, which says that you receive 80% of the benefit for 20% of your work, or, in other words, 20% of your clients.
Ditch clients that don’t work
Additionally, do you have clients that cost you money? Do they make unreasonable demands, never pay their invoices without being chased, are never happy on price, and scope creep occurs every time?Your resources – staff, time, budget – are not infinite. Getting the most out of them means choosing the right clients with which to work. Saying no to a potential sale may seem wrong, but keeping clients that waste your resources, or lower staff morale is crippling your company. Spend the time to rank your customers. Then you can see your best and worse performers. Then you can target efforts towards the most productive prospects.
Conclusion
Having complete control of work completed and the income received for your production is vital if you want to extract useful management information. Don’t forget to track any refunds or commissions that need offsetting against income. Keep track of your money from the initial proposal until it hits your bank account, then you can make sure that your business survives and then you can deliver the change you seek to make. SwiftCase helps thriving businesses, swamped by growing demand, automate and organise, to focus on what matters. Loved by 1000s of users across Insurance, Finance, Legal, Service & Contractor sectors.
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