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Discussion in 'Business Operations' started by bwanderson79, Aug 9, 2013.
Then there is always the logical solution. Bill 1/4 of customers each week to maintain cash flow.
That's a good solution. It's still not the same as being paid 3 days after you mow, but it would help with cash flow
We split our customer list in half and bill on the 1st and 15th helped tremendously with cash flow.
Putting myself in the shoes of the customer, I wouldn't want to be bothered by weekly billing. Putting myself in the shoes of the business owner, I wouldn't want to have customers on different payment schedules, that would turn into a time consuming headache. There is something to be said for having cash on hand to float your business, but if your cash flow problems are caused by slow paying customers, I'd ditch the really bad ones and contact the not so bad ones and let them know they are xx days late with payment and you require immediate payment for past services and payment is expected no later than the 5th day of the following month going forward. Some people have a really casual mentality about paying bills, it's kind of a pain to sit down and do it which is why I am set up for autopay on every bill I pay. If you can set up auto pay for all your accounts, you would be doing your customers and yourself a great service. Those who don't want it aren't really the type of customers you want anyways.
Totally agree with you "auto payment" comment, if we didn't do this, we would not bill out weekly. Its the auto payment that makes it not a hassle to the customer. writing a check weekly would be a hassle.
The OP asked about cash flow, this is the very most you can do to increase cash flow besides asking for payments before doing the work.
You have to understand that most people generally fall into one of these categories, and this is why this allows it to work well.
1. some customers are set in their ways, like to write checks, and have the money to back it up. Odds are they are retired, not the busy type. so writting a check weekly isnt really a big deal for them. Heck they are the ones that watch you mow out their window. - I identify these types and bill them monthly with a very stick late policy. this represents less than 10% of my customer base
2. Busy type, like you just stated. Auto payment is a good thing, you have enough money to cover a $40 transaction, and knowing that the bill is paid up is great because you have enough going on. - this is our ideal customer for our company. They spend money, and want things done. They don't re-bid the work to other contractors, they assume we are giving them a fair deal every time. They re-new every year provided we do a good job.
3. Thee people "think" they are busy. they act busy. But they want to control everything. They want a monthly bill, and they want to write the check. This is either because they have to "manage their money" (meaning they are broke some times) or because they are just controlling. These type -re-bid your work, they don't sign up every year. They call about the invoices and service. They ask for estimates and then cant afford the work They will jump ship for five bucks. Some have money, and are just lazy and dont write the checks, others go broke....either way I normally don't want these people.
When I said requiring the CC on new customers, we do have some flexibility in what we do with that, but like I said, it solved more than just a cash flow issue. It pre-qualified the customer.
I like the leads that come in from the internet. They type their name, and info on the page. -- this back doors into SAP so I don't have to type it.-- its a great time savings, but more importantly they just pre-qualified and told me that yes they use a computer, yes they use email, yes they will most likely accept invoices via Email, which saves us money, and they will be ok with the credit cards
As for the owner tracking it--who cares??? do you memorize all your customers address and phone numbers?? I don't. I have a computer system that tracks all of that including how often to create the invoice.
If I order a pizza, Im expected to pay for it at my door step. Think outside the box.
People are very wary of giving out personal information. I just send them a PayPal invoice and they can do it themselves. I have the swiper, but in reality have only had to use it for down paymetns on installs. I surely don't want to be responsible for safeguarding their info.
nor do i -
Not sure what everyone else has said but there are a few ways to fix it. the best way is to save up cash in the bank to cover expenses. I know its hard when you have your own bills, as you grow it gets easier.
There are ways, but they start cutting into your profit. A bank can give you a line of credit. Its like a credit card with a better interest rate. You can also give some of your customers a deal on paying for the season up front, this can give you some operating capitol.
Here, give me two $20's and then put in a savings account $200 a month for one year, there you have it, instant line of credit and a great interest rate.
Oh, it will improve your cash flow.
Come to think of it, mine too!
how is 1 year instant?