Cashflow is King

Cashflow is King: The Rule of the Three C’s:

Collect, Collect, Collect

In my days as a builder, a recurring problem was not finishing the jobs to 100%. Sometimes for months, we’d leave a few defects outstanding because they were small and we had moved on to the next project. However, that meant we couldn’t collect the final invoice, sometimes for months. In other businesses, I see that people finish the work, but wait until the end of the month or sometimes even longer before they invoice the client. Business owners will often focus solely on profit in business to the exclusion of cash flow. “How to make more money or profit in business“, is one of the 7 Big Questions about building a beautiful business and life.

Finally, most small businesses do not have a simple and consistent collection system. These three factors mean that your business is functioning as a bank for your customers. Your money is in their bank account and it’s of no use to you there. You must then constantly rob Peter to pay Paul, you can’t take advantage of early payment discounts from your suppliers and when your business is in growth mode, the problem compounds exponentially.

It’s even true that you’re cheating your customers by not completing, invoicing or collecting. Your customers want nothing more than to have their work done quickly, and when the work is completed well, your clients feel they are in your debt, and they want to remove that feeling as soon as possible. With every day that passes, that feeling of indebtedness changes and if they don’t receive your invoice until a week or a month later, they’re actually not so keen to pay you anymore.

• The 7 Rules for making money in your business

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