A big concern of many small business owners is how much cash flow is leaking out of the business undetected. Often, cash is in short supply when it's needed most, but without a clear explanation.
Here are three simple ways to detect cash flow leaks in your clients' businesses and up the value of your services so they don't have to spend sleepless nights worrying about whether they have enough cash on hand. (This is a BIG concern of many small business owners!)
1. Get Paid Now Instead of Later
How long is your client waiting for their customers to pay? Are they getting paid immediately, or do they have to wait for 10, 30, or even 60 days or more to get paid?
To maximize cash flow (and even build momentum for providing deliverables), suggest that they consider collecting up-front deposits or work off of a retainer. It's not a great idea for them to automatically extending credit. (That's what they're doing when not getting paid immediately. That means they'e at risk of getting stiffed and a big drain on cash flow!)
At the very least, recommend that your client changes payment terms to “Due Upon Receipt” if there's not a good reason to use terms of Net 30. That will boost your client's cash flow immediately, and you'll look like a hero!
CASH FLOW MAXIMIZER: make it EASY for clients' customers to pay timely. Recommend they accept online payments to make it fast and easy. If your client is using QuickBooks Online, getting a Payments merchant account is easy. Otherwise your client should be able to easily use a PayPal business account. Both have no monthly fees and only processing fees are deducted when payment is received.
2. Do a Recurring Expense Audit
In this day and age of The Cloud, your clients likely have accumulated more than a few pay-as-you-go monthly fees for various apps and services. Run a year-to-date Profit & Loss Statement and take a closer look at any online services they're paying on an ongoing basis.
Are they still worth the expense? Sit down with your clients and ask if they're still getting their money's worth? If not, recommend that they cut the expense for instant savings! Even if they *plan* to use these services or tools in the future, they can sign up again when ready to use them (and save the cash flow that they'd otherwise be losing in the meantime).
This is an add-on service you can offer all your clients every 6 months so, and the savings you uncover will likely more than justify your fee. That's an easy sell and true win-win cash flow situation!
3. Reconcile All Bank & Credit Card Accounts
You should already be reconciling your clients' bank and credit card accounts, but are you letting them know how important this is to their cash flow health? Without it, they would be missing some serious cash discrepancies, including possible fraud or invalid charges to their accounts.
Educate your clients so they realize that by reconciling their accounts with the bank statements you can…
- Find errors made in the bookkeeping records – both those by the bookkeeper and the bank
- Avoid costly overdraft charges
- Quickly identify any fraudulent activity on their accounts, which sadly, is commonplace and can easily go undetected if no one is keeping a close eye on daily account transactions.
By simply using these three powerful cash flow tips, you can increase your value to your clients and immediately boost their cash flow. That makes you an invaluable part of their business success, and gets you a loyal client.
Of course this is just the tip of the iceberg when it comes to building a high-value relationship with each of your clients. But cash is king and it's something about which your clients will immediately value your input and advice.
If you'd like to learn more about how you can become your client's most trusted adviser and genuinely build a win-win relationship, then consider joining our complete training course specifically for bookkeepers entitled The Trusted Bookkeeper.
What ways have you been able to help YOUR clients maximize their cash flow? Please share your experiences and ideas in the comments section below.