Invoice On-Time and Collect On-Time
A speaking coach told me, “Business owners have lots of pots on the stove…” I couldn’t agree more. As a result, they overlook certain vital aspects of their business, including billing customers on time and collecting payments promptly. Any function impacting your revenue and cash flow should never be on the back burner!
Receivables are the enemy of cash flow; the higher it is, the less cash is available for operations, which can quickly put your company out of business. The sooner you invoice your customers, the sooner the likelihood of collecting payment on time to ensure a steady cash flow for your business. Additionally, billing your customers on time conveys that you respect the time and value you provide them. It is also important to note that customers who pay their invoices timely are more likely to do so again, which can positively impact your bottom line and help build a healthy bank balance.
Are you asking your customers to pay you on time by invoicing them on time?
Do Not Buy Now What You Do Not Need Now
We’ve all bought something at some time that we thought put it to any use, much less a good one. We often rationalized the purchase by claiming it was on sale or it was an irresistible deal.
It’s easy to fall into the trap of feeling like you need things now when you could wait until later. Even if the item is on sale, is it a good deal if it is not necessary for your current operations, or you cannot quantify the benefit you will receive and when you will receive it? I am a proponent of investing in the necessary resources to achieve specific results. Therefore, I encourage you to be discerning with your buying decisions, as unnecessary purchases can drain cash you could use elsewhere to move your business forward. Besides, there’s nothing wrong with allowing money to accumulate in your bank account.
Are you controlling your spending, or are others dictating how you spend your money?
Eliminate Non-valuable People, Products & Services
Suppose you agree that your business needs to be profitable for you, the owner, to experience more freedom in your business and personal life. In that case, your priority must be to operate efficiently and profitably.
I know from experience that it is challenging to let go of what is familiar or comfortable. I also understand that every dollar you continue to allocate to resources (time, money, and energy) to anything that does not add to your bottom line deducts from it. Your business should be about giving and receiving value with every significant transaction – that’s where your money is. People will pay for the value they are happy with, and you want to be the beneficiary of their happiness!
Are you constantly evaluating the value you are offering and receiving?
Do Not Operate Without A Spending Plan
How many times have you purchased the exact item again? It’s just one example of what happens when you are not operating within a budget; in other words, you’re winging it. Without a logical and dependable system to track your cash outflows, you may be throwing money away, buying the same things repeatedly, and slashing your profits. Are you?
You might have great instincts and are keeping track of every dollar you spend in some way. However, following a precise spending plan based on the resources your company needs will ensure that you stay within your means. You will minimize the risk of overspending, which can lead to huge losses and potential bankruptcy.
Are you budgeting to keep maximum profit and achieve your desired long-term success?
Seize Opportunities to Lower Your Taxes
Tax time should not be a surprise! It happens about the same time every year, except under unusual circumstances! Yet, it is one of the most stressful times for business owners and self-employed individuals. It doesn’t have to be; tax savings is one of the easiest ways to keep more money by taking advantage of any available deductions or incentives.
Let’s face it; taxes are not going away any time soon. BUT tax times do not have to be anxiety-ridden. You can make it easier on yourself by keeping tight reins on your potential tax liability all year. Meet with your financial professional at least quarterly to determine if your operations will likely result in a tax bill at the business and personal levels. There may be opportunities to reduce, if not eliminate, the potential taxes.
Are you waiting for tax time to know how much you owe?
Building up your cash reserves requires a vigilant attitude toward your business finances. I hope this article provides insights to help you accomplish that.
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