Anchor: We are joined again by Private Wealth Advisor Will Rogers to talk about 5 simple tips to maintain positive cash flow in your new business.
Will, many people dream of starting a business, but when it’s first starting it might be drag on cash flow instead of a boost. What should a new business owner keep in mind when starting?
Will: Invoice on a timely basis. It isn’t unusual for some business owners to take their time sending invoices, but this can seriously hamper cash flow.
Certain day of the week / couple of days during the month
Commit to invoicing immediately after a sale is made or work completed.
Consider down payment up front, or even hiring an accountant to invoice for you.
Anchor: Asking for money can feel awkward – a system would help. When do folks usually pay?
Will: This depends on how well you implement Tip #2 – “Set clear terms for payment.” There is no hard and fast rule for what your terms must be, but the important point is to find what works for your business model and clearly communicate it to clients (ideally in writing). Also, create a repeatable system for following up if payments are not received on time.
Anchor: So if we have the money coming in, what about money going out?
Will: Great question, and the 3rd tip on our list is to “Track Expenses”
Record all expenses – consider using an ap on your phone.
Separate business and personal expenses.
Anchor: What about debt for your business?
Will: “Be cautious with debt” is the 4th tip. Bank loans should be where you start, and be very careful of expensive credit card debt.
Anchor: What else should they keep in mind?
Will: Minimize credit to customers. Depending on your business, some customers may seek to make their purchases on credit. If you determine that this is workable for your business model, be diligent in assessing the customer’s ability to repay you on a timely basis and be ESPECIALLY clear about the terms of the payment
1. Invoice on a timely basis
2. Set clear terms for payment
3. Track Expenses
4. Be cautious with debt
5. Minimize credit to customers
6. Visit www.WRogers.info for more information
Anchor. Good advice - For more information, check out Will’s website at www.WRogers.info