Every business has to earn money. It’s a fact. Without money you don’t have a business. All Small Business owners know that cash flow is vitally important. Making a profit at the end of every month can be the difference between being able to pay all their bills and then taking home a salary. The way a Small Business or indeed any business does this is via an Invoice.
Why is it that so many Small Business owners seem reluctant to issue invoices for the work they have completed or for the product they have sold? It is not uncommon for a Small Business owner to issue an invoice 4, 5 or even 6 weeks after the service has been provided. Then wait until their customer decides to pay. If the customer decides to pay the invoice on time everything is fine, however customers are increasingly paying later and later. Credit Control can then be delayed or not undertaken at all. All of which results in an invoice not being paid. A Small Business can then suffer serious cash flow issues, which ultimately, could cause them to stop trading.
How can this be avoided? There are a number of options that a Small Business can employ.
Out Source the function of invoices and credit control to a Virtual Assistant. There is a cost associated with this option, but the business owner will know that the invoicing and credit control has been completed. The other advantage of using a Virtual Assistant is that once the VA knows the business they are in a position to do some additional administrative and secretarial work for the business owner. A Virtual Assistant is generally self-employed.
Out Source to Factoring services. Factoring is an easy way to alleviate the possibility of any cash flow issues. In effect, a Small Business sells its liability (invoices raised) to a third party. They will forward the Small Business the funds raised on the invoice, deducting circa 20%. Be aware there are different sorts of Factoring, research is highly recommended. Ensure the Terms of Business are fully understood.
Employ a part-time office assistant. There is a cost involved in this option and the Small Business owner will have to comply with all employment legislation.
Out Source the accounts function of their business to a Book Keeper. There is a cost associated with this option, but a qualified Book Keeper can easily issue invoices, assume the credit control function and ensure that the accounts are kept up to date. There are two advantages of using a book keeper.
• A good bookkeeper can give some management reports that will give the Small Business owner an idea on how well the business is doing on a month by month basis
• When the accounts are sent to a qualified account, the accountant fees could reduce as the businesses financial records will have been kept up to date.