You and your crew might be busy, but is being fully booked enough to keep your business healthy? In a TSheets survey of construction firms, a striking 84% reported that they had issues with cash flow, and 19% said that they are dealing with cash flow challenges on a “constant basis.” Whether you own a roofing company, a commercial painting company, are a landscaper, or operate in another sector of the home improvement industry, you have probably experienced the negative impact of poor cash flow. If it sometimes feels like you don’t get enough money into your bank account fast enough to pay your team or buy the supplies and tools that you need to complete new jobs, then the team at AIS Solutions can help.
In addition to causing your team stress and wasting time and resources, cash flow problems restrain business growth, undermine a brand’s reputation, and cause businesses to incur unnecessary debt that becomes increasingly expensive to service. With these five strategies you can take better control of your cash flow and improve the financial health of your company.
1. Improve Invoicing and Payment Processes
Do you send off invoices the moment you are done a job? Even if you can, few home improvement companies have the payment options that allow a customer to pay on the spot, when the work is complete. Once you’re out of sight, you’re out of mind for many customers.
Our team recommends using QuickBooks Online (QBO) to send e-invoices to customers who can pay instantly through a link that is embedded directly in the invoice. Electronic invoices eliminate needless paperwork and also dramatically reduce turn-around time on payments. In fact, data shows that companies that send e-invoices with Square are paid 80% faster compared to traditional invoicing methods. At AIS Solutions we can take care of all your bookkeeping needs or if you want to do it yourself we offer training to integrate QBO with Square and other payment methods so your clients can pay you on the spot.
2. Get the Information You Need
You need a good sense of your financials in order to understand where your biggest cash flow problems are. There are several tools that integrate with QBO that you can use to visualize your cash flow and plan for the future. Our tool of choice has a simple name but is a very powerful tool and is simply called CashFlow tool. For example, Cash Flow Tool will forecast your cash flow, tell you which invoices should be your top priority, and show you where you can make changes to improve.
3. Save For Downturns
The pandemic has shown businesses the importance of preparing for unpredicted economic uncertainty. How much work will you be able to do if there’s a lockdown? How much money do you need on hand for when things start back up again? It’s important to know these figures so that you can reserve the cash you’ll need when you need it.
4. Negotiate Better Payment Terms
If your biggest problem is collecting money from clients in a timely manner, then examine your payment terms. Perhaps you should ask for a larger deposit upfront, or request payment as various stages of the job are completed. Even just asking for payment on receipt of the invoice, instead of offering a 15-, 30- or 60-day payment term can dramatically improve your cash flow and will reduce the need to chase after clients for payments.
5. Prioritize Payments
When you’re low on cash, you can strategize to keep your business going forward. Your first priority is likely payroll. Afterall, keeping skilled labour is challenging and losing a team member will cost more in the long run. Your insurance payments, and then materials for your next jobs, are likely second and third priorities. Several QBO add-ons can help suggest which bills you should prioritize and pay first.
These are just a few of the many ways that you can improve your cash flow and strengthen your financial outlook. Unlock the power of QBO for your business with advice and training from the experts at AIS Solutions. Contact us to learn more!