Summer is a slow time for many solopreneurs; our clients are on vacation or taking Fridays off, and they just aren’t calling as often as they do during the rest of the year. That means that many solopreneurs are facing a cash crunch this summer. Our recurring expenses — utilities, ISP, health insurance, etc. — still need to get paid, but the income isn’t coming in. If you were able to anticipate this slow-down, you put money aside to cover your basic expenses when your income is not coming in. But even with preparation, it’s nice to get the cash flow going again. The following are a few thoughts on how to ease cash crunches.
- Request prepayment of all projects. Many of us do this routinely, or at least get a certain percentage of the not-to-exceed budget up front. However, if you really don’t want to wait for payment 30 days after the end of the job, consider offering a 10% discount for prepayment in full.
- Learn the name of the Accounts Payable person for each of your clients and contact him or her to find out what you can do to expedite payment. Is there a billing number or cost center you should reference? Do they prefer the invoice electronically? I have found that the smaller the client, the faster I get paid, as long as I’m on a first-name basis with the A/P person.
- If you don’t already, obtain a merchant account so that you can accept credit card payments seamlessly. Many companies offer this service now, including PayPal, Square and Stripe; while they charge a fee of a few percentage points, you get the money in your bank account within a few days.
- Include bank wire transfer information when you send your invoice. Your bank or credit union can provide you with this information, and many Accounts Payable departments prefer paying electronically.
- Pay your expenses with a credit card instead of a check as long as you can pay the credit card bill in full every month. Not only does this postpone payment, but it is much easier to get a refund on a purchase if it was paid for by credit card. Of course, this assumes that you are not carrying a balance on your business charge card. If you have a balance on any of your credit cards, cut up the card and focus on paying down the balance before making any other discretionary purchases.
- Pay invoices just before they are due. The most efficient way to ensure that no invoice slips through the cracks is to pay bills at single sittings, either weekly or semimonthly. Set up automatic payments when feasible.
- Don’t take any actions that would suggest to a client or vendor that you are short on cash. So, for example, don’t cancel your business phone line, your web site or any online services that you depend on. You want to always present yourself as a business that will be around a year from now. And remember that your revenue will rise in a couple of months. If you have to spend time re-establishing accounts you canceled, you haven’t saved much in the long run.
- And finally, take this time to work on some of your long- and short-term marketing projects. If your business is slow, then you have plenty of time to focus on creative ways to remind your clients of why they can’t live without you.