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Turnover is vanity, profit is sanity but cash is king

Have just been reading an interesting article over on bookmarklee.co.uk

Here’s one simple idea that many ambitious professionals can use when presenting an invoice to a client at a meeting.  As you do so ask, in the same breath, When can I expect to receive your cheque or bank transfer? Some clients will respond by asking if 30 days is ok? Others will have their cheque books with them and write one out straight away. Others will say ‘within the week’. To everyone who doesn’t pay you there and then you ask “Can I hold you to that?”

Basically this guy is saying money owed to your business is in ‘lock down’ which essentially means you’ve done the work, sent the invoice and are now waiting for the money to actually arrive in your account.

As a small business, you will be running on a very tight budget, so getting money in the door is very important. Why not try asking for payments upfront for new clients, or using very short payment periods to allow you to get cashflow through your books, use 7 days credit instead of 14 for example.

Cash flow basically means “Do I have enough cash in my bank account to cover my expenses?” Sounds stupidly simple, but you’d be surprised at how many people ignore this.

You can have the most amazing service or product in the world, but if you run out of cash, it won’t matter. [source]

This is why its so important to get your cash flow in order, send out quotations for work, win the contract get the work done and get paid as soon as possible. Don’t let lazy clients get away without paying! YOU are not a bank, get the cash in, and fast!

About the author: Paper Free Invoices started out as a small blog for my invoicing software business Paper Free Billing but has morphed into something much more useful. I’ve really enjoyed reading the guest articles and speaking with guest publishers so much so I’m always looking for talented bloggers to contribute. If you have any questions or feedback on this article, please find your voice in the comment section, we will try to answer every genuine comment!

Comments on this entry are closed.

  • Thanks for the quote and reference.

    I agree your additional comments. As I learned long ago, best not to celebrate a new client until the cash is in the bank. Otherwise you may have been simply celebrating a commitment to do some work for a stranger who never pays you. Where’s the fun in that?!

    • admin

      Thanks for commenting on this post Mark – I actually posted this article a long time ago, but have just moved this blog from Posterous to Wordpress which is why I guess you have just got the trackback!

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