A doctor can learn a lot about a person’s state of health with a few simple measurements: pulse, temperature, and blood pressure. As an entrepreneur, you should be able to check into your business’s financial health. You should know how much is coming in and where the money is coming from as well as how much is going out and why. Let’s look at some tips to improve your company’s financial well-being.
Have a solid process when extending credit to customers
You might want to consider running a credit check on new customers and requiring a deposit before work begins. When it’s time to bill, send the invoice in a timely manner, Make your invoices clear and detailed so anyone can understand them, including any late fees you may charge. If possible make one member of your team the lead for billing and collections.
Remain strict about invoicing and collections
People with poor personal habits like eating, exercising, and hygiene aren’t in their healthiest state. We know taking care of the body is important, and it’s good to apply this principle to your company’s financial health as well.
Before you make the sale, make sure your terms and conditions are in writing, and that your customer understands them. Be sure to make payment terms clear including how long your creditors have to settle any percentages or fees relating to late payments. Poor invoicing habits can lead to reduced cash flow and losses which won’t contribute to your organization’s well-being.
Be vigilant in pursuing all outstanding receivables. If you need extra help in this area, consider outsourcing this function to a trusted third party. Also, do a post-mortem on accounts that are overdue. Consider whether something missed in the credit analysis? If so, loop back to your procedures and make changes.
Offer additional payment options
By giving your customers a variety of payment methods—credit, eCommerce, or online platforms like Stripe or Venmo, you can open new markets and opportunities to improve your bottom line.
Evaluate your Expenses Consistently
Set a consistent time to analyze all of your company’s expenses with your financial team. Consider ideas to reduce expenses or to improve efficiencies. This can include:
- Switching to lower cost consumables
- Shopping for better deals on insurance and banking
- Considering outsourcing for standard services such as payroll or digital file maintenance
- Reviewing annual contracts such as cellular service and approaching the vendor about improved pricing
Establish a Consistent Risk Management Review Process
Having the right health insurance is important to being in the best health because things go wrong, and accidents happen. Similarly, you need insurance to keep your business healthy for the same reason—things go wrong, and accidents happen. You’ll want to be certain your business has the right type and amount of insurance. Take time to thoroughly evaluate your risks and work with a professional to build a risk management program that addresses the specific needs of your business.
Update pricing
Continuously evaluate your pricing as you market your products or services. What are competitors doing? Are you consistently losing business due to pricing? Are you having to turn down business because your pricing is too attractive? Stay in touch with your customers to confirm that they see the value for the price you are charging.
Try new marketing techniques
You don’t necessarily have to spend a fortune to increase your marketing efforts. For example, using internet advertising and social media can be affordable ways to get your message to people who are likely to be interested in your products and services. However, it’s important to develop an overall plan for the use of social media. Your message must be consistent and representative of your brand and delivered to the right audience.
In Summary
Arm yourself with the right tools, a plan for how to use them, and gain the knowledge it takes to keep your business running smoothly and in excellent financial health. You’ll help your business grow in a strong, healthy, sustainable way.