How to spend 15 minutes and end up with more cash in the bank.

Do you know the most common reason small businesses fail?

Running out of money.

Staying on top of your cash flow, or the money coming in and going out, is critical to avoiding that nightmare scenario where the bills pile up and it becomes impossible to stay afloat.

Cash flow tracking might seem intimidating, so it can be helpful to pinpoint one area for improvement at a time.

I teach clients to monitor cash flow using the four finance functions framework: Operations, Recordkeeping, Administration, and Analytics. 

We can break down Operations - which I define as the critical things you do, maybe without really thinking about it, because they need to happen eventually to keep the doors open - 

into distinct categories including billing, collections, payables, and payroll. 

For my realtor clients, billing and collections happen behind the scenes through the brokerage. As long as your buyers and sellers make it to the closing table, the cash will appear.

On the other hand, for my attorney clients, billing and collections are not automatically built into the service process. 

If you get swamped with billable work but go too long without actually sending the bills, cash flowing in stops. And if you forget or procrastinate following up on old bills, the likelihood of getting paid decreases. 

You can see how investing some time and attention to developing a process will relieve lots of headaches and prevent sleepless nights. 

For billing and collections, I usually recommend time-based processes. For example, every two weeks, you spend an hour or two putting together your bills and sending them out. Whether you have one or fifty to send, it gets done every two weeks.

Then you spend an hour or two following up with the people who still owe you money. Lots of people find this one painful, but avoidance always makes it worse. 

The sooner you make it a habit, the easier it is to carve out the time, and the more stable your cash flow will be.

This week I invite you to spend 15 minutes writing down your billing and collections processes, and come up with one action step you can implement to make it easier for cash to appear in your bank account.

Then let me know what you’re doing and how it works for you!