Cash flow can be one of the most stressful components of building a business, but making time to understand and organize your day-to-day finances sets the foundation for revenue growth in the future. If you’re not sure where to start, we’ve highlighted three key areas that will help you build a reliable cash flow for your business.
1. Automate Your Billing Process
Getting paid in a timely manner is critical to cash flow. Chasing down past-due invoices is also one of the most-complained-about time-vacuums for small business owners. Add to that the time that it takes to create and send out invoices and you might be losing a lot of your working hours to getting paid and collection.
Automating your billing can alleviate this issue. Look for an option to help you automate processes at each step, including recurring billing, sending automatic payment reminders, and giving your customers the ability to pay easily through online invoices. PaySimple offers streamlined, all-in-one tools for marketing your services, accepting payments, and retaining customers.
2. Package Your Services Like Products
Another important factor for building cash flow is how you package and price your services. Many service-based businesses fall into the trap of customizing every job when that might not be the right model for their business. When every service you provide is custom, the services need to be priced accordingly. This also means working only with customers that understand and appreciate a fully custom service. The other option is to rethink your model. Consider how to package your services in a way that is repeatable and sustainable as you take on more customers and a more competitive price.
To evaluate your model, take a look at the services you provide: What could be packaged into a monthly offering or packaged in a finite way with a certain set of deliverables? Identify the services that fit this model best and start with those. Once you’ve determined what is included with each package, start selling those packages just like you would a retail product. This packaged model will help create a more predictable cash flow that you can rely on month-to-month.
3. Sell Online With eCommerce Tools and Features
If you’re not selling your services online, you are limiting your business’ growth. Selling and marketing your services online allows you to reach new customers by sharing your offerings on your website and in social media. Additionally, you’ll be able to sell online while you sleep, when you’re with your family, or while you work on other parts of your business.
There are a variety of online store providers specializing in different areas of business. Think about your business and what features (recurring billing, registration forms, customer management), are most important to the way you run your operations. Once you create an online store, your ability to sell anywhere, anytime which will also separate your from your competition. Learn more about how to build an online store for service-based businesses here.
Getting a handle on your cash flow gives you a sense of control of your business, steering towards a destination you chose. Ready to learn more? Analyzing a few simple financial ratios can make a world of difference to understanding cash flow. One of the most important calculations is the days sales outstanding ratio (DSO), which you can learn about in our how-to guide here.