Mistake #4 How Cash-flow or the lack of effects your business:
What are your hopes and dreams when it comes to your business? What are you in need of to fulfill those hopes and dreams? Is the answer cash? When your AR is reflecting on a report rather than reflecting in your bank account it can delay taking your business to the level. Cash-flow is important for the comfort and capability to invest in growth as well as rewarding yourself, your family and your employees. Why is cash important? – Because “Cash is King”!
Here are some ways that a positive cash-flow can be rewarding to your business:
- Purchasing Equipment – This industry is producing cutting edge equipment every time we turn around. In order to have the availability to purchase that equipment without going into debt you need liquid assets in your bank account. Being proactive with your accounts receivables is a great way to increase your liquid assets.
- Hiring Additional Employees and/or Opening Additional Offices – As you grow your company, you need more helping hands. A positive cash-flow provides you with the ability to add to your team. While having more team members you can accomplish more projects in a time effective manner.
- Keeping Your Business Running – Operating expenses is a must and accumulate every day. In order to keep your business going you need to bring in more cash than you are paying out. If your AR is becoming stale, your bank account is not being fed, therefor you can be sending out more money that what is coming in. If that is happening it can have a negative effect on the operation of your business.
- Employee Bonuses – With prompt collection of your AR you can reward your employees for all their dedication and long hours worked. Employees, like any of us, want to know we are appreciated for the effort we put in. When being appreciated and rewarded people are more motivated to provide positive results. Rewarding your employees with bonuses will lead to dedicated employees. With an office full of dedicated employees, your business is likely to be more successful. It is like a well-oiled machine!
- Personal Financial Freedom – Do you want to take a family vacation? Purchase a new car? Surprise your spouse with something special? Pay for your children’s college? Reward yourself for all the hard work you have put in? There is a sense of self pride when being able to reward yourself and your family for all the hard work you have put in and the long hours spent away from your family. Collecting your payments before invoices become past due will allow more personal financial freedom.
- Relieving Stress – Business owners as well as everyday people become stressed over money. It is difficult to focus on your deliverable with you are stressed or focused on the funds that are owed to you. How do we relieve the stress of money? One of the ways you can relieve the stress of money is to get the money owed to you in a timely manner. By having an AR consultant, you can take that burden off your shoulders. An AR consultant will focus on the collection of your cash earned by getting the funds to you before they become past due.
Stay Tuned Next Week for #5!