Entrepreneurial Money Management

Marci talks about the financial issues & concerns business owners’ face when running their own company.

Managing Cash Flow while Clients Vacation

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Your accounting software says you're doing well, but there's no money in the bank. Why?  Because your receivables are stalled out due to your clients' vacation schedules. There are few things more maddening than calling for collections and getting a voicemail message saying your contact will be gone for the next two weeks.

How do you budget for these random holes in your receivables? Here are some ideas:

  • 1) Before accepting work from a client, ask what their summer schedule is and if you can pre-bill items that will be due for payment during their vacation.
  • 2) Get deposits (see idea #1).
  • 3) Assume that the billing will collect at 90 days during the summer and ask for better terms from your vendors. See if you can spread out your cash flow a little
  • 4) Save up. In April and May, start hoarding your receivables to help tide you over during the slow summer months.

One of the things that took me a long time to learn is that receivable collecting has a relationship component to it. If you have good communication with your clients, then you know exactly what's coming and when. In situations where the relationship is weakened or neglected, it seems like yours is the last invoice that gets paid.

Think about it...

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  • Thanks a lot for sharing useful ideas.

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