The latest issue of Fortune Small Business magazine featured some sobering statistics:
- 94% of small business owners are concerned about saving money.
- 51% say their revenues have decreased from last year.
- 55% say their costs have increased.
- 52% say they are making payments more slowly than in the past.
I think it’s real easy to go into a panicked cost-cutting mode when you read statistics like this. In my experience, though, a lot of solopreneurs can experience a significant increase in cash flow just by tightening up their systems.
Invoice more carefully and more often. It sounds simple, but the drudgery of bookkeeping often falls behind the more exciting needs of sales and client work. But your clients aren’t going to pay you until you invoice them! I had one coach who didn’t get around to invoicing as often as she should because it took too much time away from client work. When we reviewed her time logs, she realized that she hadn’t invoiced some of her clients for over six months! Her unbilled time amounted to many thousands of extra dollars!
Keep track of your receivables. Another coach routinely got her invoices out on a monthly basis. She prepared them in MS Word, though, and didn’t keep track of the invoices that she sent out. Again, when we reviewed her time logs and her notes, there were some invoices over five months overdue! In most instances, the client had simply forgotten to pay!
Monitor those automatic payments. SalesForce charges you a monthly fee. Your internet host charges you a monthly fee. You may have upwards of a dozen monthly payments automatically hitting your checking account or credit card each month. Do you keep track of these? Have they gone up since you signed up? I had one client that had a recurring $9.95 fee on his bank account and had no idea what it was even for! I have another client that had a monthly fee increase from $10 each month to $23 each month without any notice from the vendor! These little charges and increases can add up to hundreds of dollars over the course of the year. Do you know where all of your money is going??
If you feel you don’t have the time to attend to the monthly invoicing and receivables, outsource! If you don’t feel you have the expertise or the attention to detail needed to keep on top of monthly expenses, outsource! Some of the many reasons for outsourcing your bookkeeping include:
- Professional attention to detail, watching where your money is going
- Less of your time spent on the books, leaving more time for sales and client work
- Improved cash flow — getting all of your billable time billed and all of your invoices collected.
- Greater accuracy in your business numbers, helping you make better business decisions
- Lower taxes — your records will be ready-to-go for tax time and you’ll know you’ve captured all possible business deductions
Deb Howard Greenleaf, EA, CEO and Principal, of Greenleaf Accounting Services provides virtual accounting and bookkeeping services and specializes in financial management to consultants, coaches, solo professionals, and other small business owners across the US. Deb is an Enrolled Agent (EA)—an IRS-licensed tax professional—and specializes in small businesses and entrepreneurs filing Schedule C or as an LLC. As an Advanced Certified QuickBooks ProAdvisor, Deb spends her day in QuickBooks Online and specializes in providing QBO support.