It’s an unfortunate reality that so many of us always wonder why our wallet is suddenly much lighter than we remembered not long ago. Developing better business money habits can help you save money and help create the lifestyle that you always dreamed of.
So why wait for the New Year or to pay off your debt to start saving money? Start now and you can begin seeing results sooner. Don’t wait for the “right time” because there won’t be one. Here are some tips to help save money now!
Keep Track of Receivables
One sure way to create better business money habits is to increase your collection of receivables. The faster you collect your receivables, the faster the cash flows into your business. There are a few ways you can do this. First, always try and follow up with customers to ensure that they received their invoice. This will either give them a friendly reminder to make a payment or, if they didn’t receive the invoice, give you the chance to send it over. If possible, an Accounts Receivable clerk should be appointed to manage the collection of receivables. This will further encourage fast collection of receivables if they are being closely and constantly monitored.
Another way to increase collection of receivables is to implement a sales contract with payment terms, such as 2/10, N/30. This means that if the customer pays their invoice within 10 days, they get a 2% discount off the original price. Otherwise, after 10 days they must pay the invoice in full and after 30 days interest is typically charged. By creating fast payment incentives and late payment consequences, you encourage the customer to pay their invoice a lot faster than if there were no payment terms. In addition, this also minimizes the likelihood of uncollectable accounts due to delayed receivables.
Discuss Payment Terms
Another way to develop better business money habits is to discuss payment terms with your suppliers. Your payment terms should be longer than or equal to your accounts receivable terms in order to maintain positive cash flows. Although, be mindful that you don’t want to delay your payment terms so much that you harm the relationship between you and your suppliers.
Start Small for Big Results
Don’t try and change all your finances at once. This will only create an impossible feat. Instead, identify the area of financial reform that will make the most significant impact, and focus on that. These small changes are easy to incorporate into your everyday life. Moreover, make sure that this area fits with your priorities so that you’re invested in the end result. Then, once you improve this area you can move on to other areas. Before you know it all of these small changes will lead to significant results. Some areas to prioritize in order to improve your financial life include:
- Spending less
- Paying down debt
- Saving for retirement or a down payment on a house
Everyday Decisions Add Up to Larger Profits
Last, but definitely not least, the best way to save money and increase cash flow lies in your everyday decisions. By being mindful and making it a habit to save money wherever possible on a daily basis, you will notice your unnecessary expenses decrease which will lead to greater profits. Soon enough, you won’t even have to think about these decisions anymore as they will become a habit during your everyday life.
We know that saving money can be a difficult feat. Hopefully these tips will help improve your business money habits. Interested in learning more? Contact our team at (226) 214-3233 and we would be happy to advise.