Have you considered your cash flow strategy for this year? With New Year’s financial resolutions in the rearview mirror, you may find yourself wondering where to start when it comes to improving your business cash flow and finances in 2017. The good news: The year has only just begun and you can use the first quarter to get your business finances in order for the rest of the year.
4 Ways to Improve Your Cash Flow and Finances
Make sure you have business contracts in place
Regardless of whether you hire outside contractors to work for your small business or you are the one completing work for another entity, make sure you have clear contracts in place. For example, if you are paying a contractor to complete a project for you, it’s a smart idea to have a signed work-for-hire agreement in place before any work begins. You can use this agreement to explain terms of the project and outline deadlines. This way, you hopefully won’t find yourself in a situation where you have paid for work that is either not turned in or not completed to your satisfaction. Likewise, if you do work for others, a contract will also outline the terms and payment specifics. With an agreement like this in place, this will decrease the risk of not getting paid for your hard work.
Understand your taxes
You may have already started to review your 2016 taxes, but as we get closer to the spring, now is also a good time to understand how you can save money and improve your cash flow in 2017. You can start by determining what tax deductions you plan on taking for your business in 2016 and determining what other possible write-offs are available to you this year. If you just started your business in the last year or so, you may want to pay quarterly taxes in 2017. This way, you can better manage your cash flow throughout the year and you won’t get stuck with a potentially large tax bill at the end of the year. Another piece of advice: When evaluating your tax deductions and payments, it’s a wise idea to consult a tax advisor or accountant.
Streamline your invoicing and accounting system
You may already use a bookkeeping app to write and send invoices, receive payments, and even manage your tax and accounting functions. Now is a good time to determine whether that system is the best one for your business and evaluate other options that can save you money. If you don’t currently use an accounting platform, it’s a good idea to jump on the bandwagon as this type of software can help you simplify and automate your invoicing needs. In fact, several platforms can help you do this, including Quickbooks, Freshbooks, and Clio. Some tips to get paid faster: Send invoices right after a project or work is completed with clear payment terms, such as “payable within 30 days.” When writing your invoices, it’s also advisable to outline other important details, such as project specifics, amount of the invoice, any late fees, and how your client can pay you. This would include via check, PayPal, credit card, or direct deposit. If you have a company logo, you can also include that on your invoice. According to Due.com, invoices with logos increase payment chances by 300%.
If your client doesn’t pay you within your payment timeline, you can then send a payment reminder through your accounting system or even send your client a gentle email nudge.
Figure out your financing needs
With the new year in full swing, now is good time to review your cash flow statements from 2016. Did you find yourself in a cash flow crunch at any time during the year? Do you anticipate the same thing happening this year?
If you think you may need to take out a business loan to help keep your cash flowing, you may want to think again. Traditional business loans can be difficult to get and if you do qualify for a bank loan, it can take weeks before you see the funds. Instead, there are alternative types of funding available and if managing your cash flow is a top concern, invoice financing might be the best option for you. This type of funding through Fundbox will provide you with cash advances on your outstanding invoices. To get started, you don’t need to fill out a lengthy application. Rather, you can sign up for invoice financing online and start getting cash advances typically within one business day. To pay back these advances, you’ll need to make weekly payments to Fundbox over the course of 12 or 24 weeks. These payments will include a small fee. To check on the fees and payments, all you need to do is go into the Fundbox dashboard before confirming the invoice you’d like to clear.