Now that the initial dust has settled on the budget it is time to take a serious look at your cash flow. Yes, granted some of the measures introduced higher rates of tax, reductions in relief, increased employer NICs raise the anxiety barometer, but there are specific tactics that can help keep your business afloat (and help reduce your blood pressure):
- Cut Debt via Efficient Invoicing. Most companies have a monthly bill cycle, but if you were to invoice as soon as projects are completed, then you could effectively improve your cash flow by 30 days. Better still, offer an incentive to bill a client at the beginning of the project. Try to better manage late-payers, too. Invoices should be re-issued a limited number of times, and if payment still isn’t forthcoming then consider a more serious course of action.
- Attract More Customers. If you rely heavily on just one or two major clients and you suddenly lose them, then your income may well go below zero overnight. Your business will be much safer if you have a large client base. That way, if a client goes bankrupt and can’t (or won’t) pay and that represents 10 per cent of your income, you still have a heart-relieving 90 per cent of left.
- Encourage Long-Term Retainers. Not every job need be a one-off. Charging a retainer fee for a regular type of work such as blog ghost-writing, SEO or website maintenance – can give your business security when it comes to cash flow. Clients may be encouraged to work on a retainer basis with you if you offer them a discount on your usual fees on account of the fact that the work will be consistent. Most people charge up front for retainer work (ie, in advance at the beginning of each month).
- Prioritise Your Workload. Organisation and time management is a challenge for any freelancer or small-business-owner, but to keep your cash flow healthy you need to keep focused AND prioritise the ‘high-yield’ income earners. This means doing the work that will bring you the most cash in the least amount of time first BEFORE you check your blog or Facebook page. Completing billable work is always your cash-flow’s best friend.
- Outsource. Taking on someone with the skills and experience of a good copywriter, say, as an employee is prohibitively expensive. This is especially true as copywriting isnt your typical day-to-day, full-year activity for most organisations. Which is why outsourcing to a freelance or self-employed professional makes sound financial sense. By varying the type and amount of services you buy in, you’re paying only for the actual skills needed. Additional benefits include no overtime, sick or holiday leave to pay, no PAYEE or national insurance to fork out for, no recruitment or training costs and no paying for people sitting at their desk twiddling their thumbs when there’s a shortage of projects.