Even profitable businesses run out of cash when clients pay late. Ten practical ways to keep more money coming in on time.
BillingOtter Team
Cash flow is the movement of money in and out of your business. It is not the same as profit: you can be profitable on paper and still run out of cash when clients pay late and your own bills fall due. A widely quoted U.S. Bank study found that 82% of small business failures were linked to poor cash flow management.
The sooner you invoice, the sooner you get paid. Send the invoice the day the work is done, not at the end of the month. The free invoice generator makes one in your browser.
Be explicit about when payment is due. "Due on receipt" and "Net 15" are common; payment terms explained compares them.
Many late payments are simply forgotten. Send reminders on a schedule, using payment reminder email templates or automatic reminders.
A 2% discount for payment within 10 days (2/10 Net 30) can speed up collections from larger clients.
Leave a buffer between when you get paid and when you pay your own suppliers.
Review your cash position every week, not just at month end.
Aim to keep 3 to 6 months of operating expenses in reserve.
A separate business account makes money in and out much easier to track.
Save during busy months for the slow ones.
Software keeps track of which invoices are paid, due and overdue, and can send the reminders for you.
Start with the first three tips: invoice the same day, put clear terms on every invoice, and follow up on a schedule. They cost nothing and they bring money in sooner. For new or large jobs, a deposit up front helps too.
Every BillingOtter plan, Free included, shows which invoices are paid, due and overdue.
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