Most businesses experience seasonal ebbs and flows in their cash flow throughout the year. However, some businesses like landscaping, tax prep and pool maintenance are dependent on specific seasons. These business owners can benefit greatly from understanding the trends and being proactive about planning for them.
If your business is struggling to overcome the slow months, here are five ways Invoice2go can help smooth out your cash flow:
Understand the cyclical trends in your industry
Take a look at your sales data over the last 2 years to see how much the off-season affects your cash flow. If you’re new to your industry or aren’t sure if your cash flow trends are normal, consult peers and free industry data sources like the ones listed by the U.S. Small Business Administration. Keep in mind variables like location and demographics to get a more accurate comparison.
Maximize for the ups, and prepare for the downs
In your Invoice2go app, use the Sales by Month and Payments by Month reports to make a 6-month plan. For the busy season, be ready to take on extra work, which may mean hiring temporary help. Arrange any outsourcing early so you’re not in a jam when the work picks up. Budget specific amounts of cash to put into savings which will cover expenses during the slow months.
Also be sure to set aside funds to promote your business in the off-season. Check out our list of 21 ways to promote your business for some simple, cost-effective ideas.
Identify your top clients, and treat them accordingly all year round
Use the Sales by Client report and study which customers are the most valuable to you – which ones are repeat, and which ones earn you the most, etc. Repeat customers are key to building ongoing income you can count on. Stay in touch with them year round, offer them special discounts, and suggest additional services they may benefit from.
Speed up customer payments
No one likes to feel like a bill collector, but if you have a lot of outstanding invoices, it’s that much harder to maintain your cash flow. Some ideas to make the process smoother:
- Encourage debit/credit card payments and in-person payments to get paid immediately.
- Require deposits for large and long-term projects.
- Set up automatic payment reminders in the Invoice2go app under Settings and Client Communication.
- Shorten payment terms. Here’s a snapshot of how to define the best payment terms for your business.
- Offer a discount for early payment.
- Set late payment terms up front and stick to them.
Monitor your cash flow every month
Keep track of outstanding balances, monthly sales figures and expenses with Invoice2go reports. Closely monitoring these numbers means you can find ways to cut or modify expenses. For example, you could request due date changes for your credit cards, utilities and other vendors to better coincide with your monthly income cycles.
With careful planning and Invoice2go, your business can survive seasonal swings. Still have questions? Visit our Help Center or contact us for assistance.