You Need To Take Your Cash flow Seriously.

You Need To Take Your Cash flow Seriously.

Being a freelancer is hard work. Being a small business owner is hard work. Running a startup is hard work.

They’re all hard work because nobody wants to pay you. No matter how good your work is, or how far you’ve gone to meet the needs of your customers, they won’t want to give you money.

It will happen time and time again. It will happen with clients you trust, who have always paid in the past. It will happen with new clients who come recommended. It will happen with your best friends and your family.

They’ll come up with all kinds of different ways to avoid paying. Maybe you missed their monthly invoicing cycle and it’s just against their company policy to pay you outside of it.

Or maybe they’ve hit a snag. They can’t get a manager to sign off. They “lost” your invoice. The bank “lost” their transaction. You must have given them the wrong account details. It’s been put through, but it’ll take a week to show up.

So what’s the solution? How do you get around it all? How do you get paid?

  1. Talk money early, and talk it hard.

When someone asks you for a service or a product, you talk money. Early in the conversation, you highlight what the cost is going to be and explain that nothing happens without money.

You’ll be surprised how many people will accept your fees without too much complaint if you make it clear that you take them seriously. You don’t have to be rude about it — just be up front and honest.

That kind of information can’t be delayed, because your fees set the tone of the entire conversation or negotiation. Feel free to negotiate, and discuss the fees, but don’t back down from demanding them.

You deserve to get paid; don’t be too embarrassed to tell people that.

It’s crucial to make sure that you have a record of an agreement. If it’s a signed letter agreeing to the work or a contract, that’s going to be the best option. If you can’t or don’t feel comfortable sending a contract to your client, put all the terms of your agreement into an email and get them to send you an email confirming those terms.

  1. Get yourself a safety net.

I hate doing this, but it is a must. Do not start any business or offer any service unless you have a safety net. Here’s some options:

A company credit card

A backer

A professional invoice purchasing company who can handle your invoices for you, in exchange for a percentage.

A healthy savings account

The end goal is always going to be this. Have a back-up plan for when people don’t pay. You need to keep the lights on, the bills paid and the staff happy, and a safety net is the only way to guarantee that.

  1. Keep records of everything.

Everything. Every email, every invoice, every remittance notice, every receipt, every call log. You want to have the information you need at your fingertips so you can constantly refer to it as needed.

It’s partly to safeguard yourself, so you can prove what was said and when. It’s partly to ensure you’re monitoring the financial situation of every single client or contract and not letting any information fall through the cracks.

Don’t lose yourself in a complicated filing system either. That’s going to waste time. Take photos or scan your records and save everything to Dropbox, OneNote, Evernote, or Google Drive. But save it. Tag it. Make it searchable.

  1. Communicate professionally.

Don’t text your clients. Don’t snapchat them. Don’t do deals through a chat program. Don’t rely on a phone call. You need to make sure that all your communication goes through provable, traceable professional channels.

Make sure you’re using emails, you’re using contracts and letters of agreement and proper proposals.

You want every single interaction with your client to be professional and be suitable to use if you ever need to show a record of your relationship with them in order to secure payment and get them to stick to their word.

  1. Use the right software.

Don’t try and run a business using a spreadsheet. That’s asking for trouble, and it’s asking for information to get completely lost. Use invoicing and accounting software to make sure your payment processes are clear, automated and controlled.

If you don’t do that, you’re giving your clients a reason to avoid paying you, and trust me — they don’t need you to give them any more excuses.

There are probably a dozen top notch accounting packages that you can easily use to keep the invoices going out and the money coming in.

  1. Don’t make exceptions.

Nobody gets to avoid paying. Not your friends, and not your relatives. No matter how reputable they are.

Everyone pays. Everyone follows your rules. When you make one exception, you’re committing to making one hundred. That’s just the way people work.

No matter what they offer, or what excuse they come up with, don’t walk away without your money.

It’s not a game. Work, business, contracts and cash flow— you have to take them seriously, and you can’t let anyone get away with not paying you. At the end of the day, your cash flow is what allows you to stay in business, and going soft on it means you will shut down.

The most important part of what you do will always be getting paid. If it’s not, I have news for you.

This isn’t your business. It’s your hobby.

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