![]() ![]() ![]() For entrepreneurs who don’t have the same access to capital and cash savings as large corporations, a cash flow hiccup could lead to a tragic end to a lifelong dream of owning a business.ĭespite the toughening economic conditions we face in 2023, there’s still some good news for entrepreneurs. The Importance Of Cash FlowĬash flow is the lifeblood of any business. Just don’t forget the payment terms on the invoice. As long as you hold up your end of the bargain by performing the work agreed to, you have every right to expect payment. Too many times, entrepreneurs make the mistake of forgetting to negotiate payment terms for their work and then making sure those terms are included on the invoice they send for the work done.įor those not in the know, an invoice is not an actual contract, but it does show what two parties have agreed to transact together. Payment Is DueĪs an extension of my point about paying attention to details, this topic has such a huge impact on collecting payments I think it’s worth noting separately. Doing some up-front research-give LinkedIn and Google business profiles a try-can help you find out whether a potential customer is trustworthy or not. Sadly, as the economy goes south, you will probably see problematic customers popping up more. By not being selective about who you do business with, you risk having more clients who either slow pay you, partially pay you or never pay you. Many cash flow mistakes entrepreneurs make can be tied to who they decide to bring on as a customer. Make sure to stand up for yourself and get paid for every service, for it can add up quickly. If you want to be in business in 10 years' time, however, you’ll have to knock on a lot of doors. The burden often falls on a subcontractor to go knocking on doors for payment. Imagine a plumber who works hard to get a new home properly set up with its bath and shower, bathroom fixtures and toilets only to get the cold shoulder from the general contractor. There’s nothing worse than putting in a lot of hard work and not getting paid for your effort. To avoid disastrous misses on forecasts, consider sharing it with some trusted business advisors like your CPA or business banker. That extra cash you put into more chardonnay resulted in additional cases that you’ll now have to sell at a loss. Fast-forward to 2023, and customers are far less inclined to spend money on high-priced wine. Your response? Plant a bunch more eventually. You had a good year in 2021 because of a flattering review from an online wine expert who gushed about your latest pricey chardonnay. Imagine you are a fledgling wine producer in Oregon. If you want to keep store inventory in proper order, you might consider hiring a bookkeeper or using inventory management software. Now you’ve got to catch up on invoices and figure out how to slow down paying your vendors. It dawns on you that you have neglected to send invoices to some customers.Ī little more digging around reveals that you have mislaid some of your purchase orders for supplies and are behind on vendor payments. One Saturday, you realize your business bank account is now in the red. Say you run an online boutique supply company. There are a lot of moving parts to businesses. Don’t let this cash flow mistake bite you in the hind quarters come tax time, as it could lead to an expensive fine on top of the taxes you owe. ![]() Unfortunately, in the eyes of the IRS and state tax authorities, they won’t cut you much slack for failure to pay taxes. Maybe it’s washing windows on Main Street or on a platform over Wall Street, but you forgot to set aside money to pay your payroll taxes.
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