Better Business Money HabitsBrian Jang ON February 24, 2021
It often seems as though money just doesn’t go as far as it used to, or that it goes out as fast as it comes in. Every business owner wants to save money, but often it seems like it is simply not possible. Fortunately, if you can develop better business money habits, it is possible and probably not as hard as you might think. Best of all, the sooner you start, the sooner you can start saving!
Here are some tips to help you develop better business money habits:
- Track Your Receivables
This is one habit you definitely need to develop and should be at the top of your to-do list. Increasing your collection of receivables is important because the sooner you can collect your receivables, the sooner your business will see some cash flow.
There are a few ways of doing this, but you should begin by confirming with the customer that they received their invoice. If they never received it, or if it somehow went missing, you can send them a copy now. If they did receive it, this can be a reminder to them that it needs attention.
Ideally, you should have an Accounts Receivable clerk who can oversee the collection of receivables. This will help ensure that they are collected on time.
Another simple way of increasing your collection of receivables is to offer payment incentives and consequences. For example, if you have payment terms of 2/10, N/30, your customer will receive a discount of 2% off of the original price if they pay within 10 days. Payment received between 10 and 30 days is processed as normal, while payment made after 30 days incurs interest. Customers will want to take advantage of the incentive, or at least avoid the penalties. This will likely also reduce the number of non collectable accounts due to delayed receivables.
- Be Clear on Payment Terms
Be sure to discuss your payment terms with your suppliers. To maintain positive cash flow, set your payment terms longer than or equal to your accounts receivable terms, just not so long that the delay could harm your relationships with your suppliers.
- Develop Your Strategies Over Time
Don’t try to change everything right away; start small and build from there, or you may find yourself struggling. Begin by highlighting those areas most in need of change and focus on those. They will likely have the greatest impact as you adjust them. Making a few small changes at a time allows you to adapt and develop new habits more easily. As you incorporate these changes and start to see progress, then you can consider moving on to something else. Be patient—small changes create lasting impact.
Some of the areas you should prioritize include:
- Spending Less
- Paying down your debt
- Putting aside funds for your major purchases, or your eventual retirement
Small Decisions, Big Impact
By far, the best way to start saving money and increasing your cash flow lies in the innumerable little decisions made daily. Be aware of your expenditures and make a point of saving wherever possible. Do this daily and you will begin to see a decrease in your unnecessary expenses, in turn giving greater profits. Eventually this will become a habit and what once seemed like an impossible goal will become a reality.
Looking for better business habits, reach out to BCJ Group today!