Here’s an all-too-common scenario: A seemingly successful small business owner is hard at work growing her business. She’s working lots of hours, and her hourly rate is respectable. But her cash flow is dismal.
Why?
Because she’s working so hard that finding the time to actually take control of her money is impossible.
Invoices don’t get sent on time. Past due balances are ignored. Taxes aren’t done. And maybe worst of all, she’s got dozens of recurring payments that go out automatically each and every month, and she has no idea what they are or if she’s even using the programs she’s paying for.
Sound familiar? Sadly, that’s exactly what a lot of “successful” businesses look like. When you work at home, and you’re accountable to no one but yourself, it’s far too easy to let these little things slide until, like an avalanche, they have a devastating effect on your business.
The good news is, cleaning it up is easy, when you take the time to put some trusted systems in place.
Start with your billing. Sign up for (and use) a system such as Freshbooks or Harvest, which will automate your timekeeping and produce an invoice with a single click of a button. Then put your billing day on your calendar as an unbreakable appointment.
Log into your timekeeping app, generate your invoices, and click send. You’ll be done in a jiffy. Not only that, but most billing systems automatically send follow-up messages for unpaid invoices, so you don’t have to worry about tracking down those slow pays.
For your expenses, use a single system. That might be PayPal or a dedicated credit card or even your business checking account. Whatever it is, be sure it has a reporting feature that will allow you to send monthly statements to your accountant. At the end of every month, bundle that up with your sales report and your receipts, and send it off. When tax time rolls around, you’ll be sitting back with your feet up while everyone else scrambles to find documents and update their accounting system.
If you do your own taxes (kudos to you!) then look for tools that will talk to each other easily. For example, you can download a Quickbooks file right from PayPal for super-fast reconciliation at the end of every month. That alone will save you hours of “doing the books.”
Just putting these two simple systems in place can easily save you 10+ hours per month, but the even larger benefit is that the money work will get done. And what that will do for your cash flow is priceless.
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Mickey Mikeworth,(Mikeworth Consulting), Prosperity Leader, Chief Financial Officer Strategy, and a whole lot more
For your micro journal today, reflect on some kind of art that inspired you today. It could be…
Been talking about getting a better handle on your finances? The best way to do that is to create an actual budget. You might think budgets are kind of a pain, but they don’t have to be. Make it Easy Peasy–think about the process as a spending and savings plan. Figure out your resources and then decide how you want to allocate them. Viola! You have the beginnings of a budget! Sometimes it’s good to start with the basics, such as the basic outline for a budget and the categories you want to include. Here are some tips to help you create a simple family budget.
