Rent, utilities, supplies, web designer fees, delivery charges; your list of expenses seems to have no end. That’s the reality of being an entrepreneur. It’s a daunting rollercoaster of emotion. One minute you’re over the moon, the next you’re hiding under your desk. It’s not for everybody.
But you’re a risk-taker. You enjoy having decisions and consequences firmly in your hands, right? Well regardless of your risk tolerance, how you process outstanding invoices: The business bills you haven’t yet paid, are crucial for its survival. This is the foundation of cash flow management. Deciding what bills to pay, and which ones to delay payment for, is one of the most critical skills you’ll need to know as a small business owner.
A Useful Guide
Your accounting software can go a long way in keeping track of outstanding invoices. Having a list of payables at your fingertips, or maybe even receiving reminders of important outstanding invoices is helpful. However, it’s only a useful guide. For each outstanding invoice, it’s up to decide whether to pay or delay.
Still, if you haven’t so already, you should acquire reputable accounting software that will bring structure to your record keeping.
Set up Cash Flow Management Systems
Using solid accounting software is the first step in creating an effective cash flow management system. This is needed to not only keep track of your outstanding invoices but to maintain control of the money coming in and going out of your business. Remember, you’re in business to make money, right?
You should also seek professional advice from an accountant, who can assess your business and propose specific systems you can implement.
Collect Every Penny
The most important, yet often overlooked factor in better managing your outstanding invoices, is to have the money to pay them. Picture this scenario: You have $1,000 in outstanding invoices, but your customers owe you $3,000 (aka accounts receivable). You need to collect your money! It makes no sense for you to be stressed out about bills when you should have more than enough cash available to settle your outstanding invoices.
Talk To Your Creditors
If you’re going through a difficult patch, and you have outstanding invoices that are way past due, which is completely understandable given the COVID-19 pandemic, then you should consider speaking to your creditors.
It’s normal, even expected, for a business to encounter difficult times. During these periods of adversity, small business owners must take swift action to address outstanding receivables which could put them out of business. A simple phone call or an in-person visit to a creditor might be all you need to receive an extension on payment. This might give you just enough breathing room necessary, and avert what first appeared to be certain doom.
You’re An Entrepreneur
Keeping track of your company’s outstanding invoices is necessary to run a sustainable business. It’s a process that can cause long sleepless nights as you sit and grapple with the bills to be paid. But your business’s bills are your responsibility. And no matter how stressful keeping up with them can be, this is what you signed up for as an entrepreneur.