Are You Making These Three Big Mistakes When It Comes to Your Business Revenues?
When you open a brand-new business, you need to do a lot of research to determine the market demand and finalise your product or service. You may have come up with a fantastic solution, and you're sure that you can make money from it, but this alone is not going to guarantee any success. Just because your service or product is profitable, it doesn't mean that you're going to be able to manage your cash flow and keep the doors open. What are three big issues that you may have overlooked?
Being Informal Will Kill Your Business
Firstly, you have to be formal when it comes to doing business. You may have a happy-go-lucky personality or deal with people you consider to be your friends and trustworthy. However, you're making a big assumption if you do this. You have to focus on the details and ensure that your customers understand your payment terms or any credit you may extend.
You need to have a solicitor draft up your terms and conditions whenever you supply services or products to a customer on credit. After that, the customers have to formally accept these terms and sign a contract when they do. When disputes arise (and they will), there will be far less confusion. Remember, you need to charge penalties and/or interest if accounts go into default.
Don't Put Off Invoicing
You may have taken care of the contracts, but your formal process does not end there. Invoices have to be generated immediately whenever a product or service is provided on credit. It's not something that you can do at the end of the week with other administrative tasks or when you've got some time. You need an automated system to help you here, and the content of the invoice has to be very clear. Tell customers in bold print when and where they need to make the payment.
Getting a Professional to Oversee Everything
Finally, you need someone to keep an eye on this all for you. While you might be able to get automated systems in place to generate invoices and send them out, you do need professional help to look at all the other details. So many elements can affect your cash flow and in turn your monthly profitability. A good accountant can often see problems before they hit you in the face, so in this respect they are worth their weight in gold.