Cash flow is the lifeblood of every business. In this episode, guest host and Kickstart’s Business Development Manager, Aubrey Philipp, walks through 8 actionable steps you can take to help improve cash flow and keep a consistent inflow, whether you’re looking to boost short-term profits or build a strong foundation for long-term success.
From determining your financial focus to strategically using debt, this episode has tips every entrepreneur and business owner can apply today to take control of their cash flow!
Key Takeaways:
- Understand Your Financial Focus: Decide whether to prioritize short-term profits or long-term value. This clarity will guide your decisions and strategies.
- Assign Ownership: Every line on your income statement should have a designated team member who takes responsibility for that line to ensure accountability and alignment with your business’s goals.
- Assess Client Profitability: Identify clients or services that are consistently unprofitable and consider letting them go to free up resources for more lucrative opportunities.
- Collect Payments Upfront: Improve cash flow and reduce unpaid invoices by requiring deposits, retainers, or full payments before work begins.
- Bill Early and Often: Frequent billing keeps cash coming in and reduces delays in payments. Break invoices into smaller, more manageable installments if possible.
- Dedicate Time to Implementation: Block time regularly to act on strategies that enhance your cash flow. Consistency is key to success.
- Use Debt Strategically: When planned properly, debt (like a line of credit) can be a powerful tool to stabilize cash flow and fund growth.
- Monitor and Adjust Regularly: Cash flow management is an ongoing process. Review your finances regularly and tweak strategies as needed to stay ahead.
Topics Discussed:
The Importance of Cash Flow (00:24 - 00:50)
Step 1: Determine Your Financial Focus (00:51 - 01:25)
Step 2: Assign Responsibility for Each Line in Your Income Statement (01:25 - 02:03)
Step 3: Assess Profitability by Client and Service (02:03 - 02:29)
Step 4: Collect Payments Upfront (00:03:03 - 00:03:35)
Step 5: Bill Early and Bill Often (03:35 - 04:01)
Step 6: Dedicate Time to Implement Strategies (04:01 - 04:28)
Step 7: Use Debt Strategically (00:04:28 - 00:04:48)
Step 8: Monitor and Adjust Regularly (04:48 - 05:14)
Resources:
Episode 200 | Cash Flow: Are You the Problem? Why Consistency is Key to Sustainable Revenue
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Episode Transcript
00;00;00;00 - 00;00;23;28
Aubrey Philipp
Welcome back to Business by the Books, where we help business owners and entrepreneurs thrive by understanding their numbers and empowering them with the knowledge they need to meet their business goals. I'm filling in for Danielle today as host. I'm Aubrey and I've been a guest on Business by the Books just a few times now, but also lead our business development and onboarding teams here at Kickstart Accounting.
00;00;24;00 - 00;00;46;19
Aubrey Philipp
Today, we're diving into one of the most crucial topics for any business, cash flow. Yes, cash flow, the lifeblood of your business. It's what keeps the lights on. Employees, contractors and you paid, and your goals within reach. Today we're breaking down practical ways to increase your cash flow. Whether you're focused on short-term profits or building long-term value
00;00;46;19 - 00;01;12;16
Aubrey Philipp
these tips will help you make smarter financial decisions. Let's get started. Number one, determine your number one focus. Short-term profit or long-term value. The first step is getting crystal clear about your priorities. Are you focused on short-term profits or building long-term value within your business? Short-term profit is about maximizing immediate revenue and managing expenses very closely.
00;01;12;18 - 00;01;39;03
Aubrey Philipp
Long-term value prioritizes investments that build your balance sheet, like acquiring assets or growing equity. Understanding this distinction will help your strategy and guide your decision-making. Number two, assign responsibility for every line in your income statement, every line on your income statement or what. We also know as the profit and loss statement tells a story, and it's critical to know who's responsible for each one.
00;01;39;08 - 00;02;03;02
Aubrey Philipp
Assign ownership to specific team members in your team, and make sure they understand how their role aligns with your overall business strategy. When everyone knows their role, it's easier to hold them accountable and ensure your goals are met. We do this here at Kickstart, and it not only helps each of us individually meet our goals year over year, but it also contributes to the company's mission as a whole.
00;02;03;03 - 00;02;33;03
Aubrey Philipp
Number three, assess profitability by client. Not all clients are created equal. Take a hard look at profitability by client. Are there clients or services that are consistently unprofitable? It might be time to fire those clients or discontinue those services. Remember, every dollar you save on unprofitable work can be redirected to more lucrative opportunities in the future. Quick break before we dive back in.
00;02;33;05 - 00;03;00;16
Aubrey Philipp
If you're an entrepreneur ready to streamline your financials, Kickstart Accounting has the solution. Our proven bookkeeping services are designed for entrepreneurs like you to provide clear, accurate financial records, giving you time to focus on growing your business. Book a discovery call at Kickstart Accounting incumbent or click the link in the show notes. Let's get your finances in order so you can scale with confidence.
00;03;00;20 - 00;03;35;16
Aubrey Philipp
Now back to the show. Number four, collect money before completing work. Here's a game changer. Collect payment upfront from your customers. Whether it's a deposit, retainer or full payment. Getting cash in hand before the work is done significantly improves your cash flow and reduces the risk of unpaid invoices. We have new clients come to us all the time who are struggling with cash flow, but are still showing a profit, and almost 99% of the time it is because they are not invoicing their services upfront.
00;03;35;16 - 00;04;01;20
Aubrey Philipp
Number five is also a little bit related with this, but bill early and bill often, so don't wait until the end of the month to send out all of your invoices bill as early as possible. And if your business model allows, break invoices into smaller, more frequent installments, frequent billing keeps the cash flowing into your business and minimizes the risk of delayed payments from customers.
00;04;01;25 - 00;04;28;21
Aubrey Philipp
Number six, dedicate time to implement what you learn. Let's be honest knowing what to do is half the battle. Dedication to consistent implementing passion is what separates successful businesses from the rest. Block out time every week to focus on strategies that improve cash flow and stick to it. Danielle talks more about this and how to keep cash flow consistent in episode 200, so be sure to check that out.
00;04;28;22 - 00;04;55;07
Aubrey Philipp
Number seven, consider debt strategic. We say this all the time. That doesn't have to be a bad word. Sometimes a line of credit or factoring invoices can be a smart move to improve cash flow within your business. The key is to use debt strategically and ensure you have a plan for repayment. Number eight monitor and adjust. Finally, cash flow isn't something you fix once and forget about.
00;04;55;07 - 00;05;20;10
Aubrey Philipp
It's a continuous process. Monitor your cash flow regularly, review your strategies, and adjust as needed. This ensures your business stays agile and financially healthy. If you're a kickstart client, this is one of our favorite topics to discuss during your financial review column. So don't be afraid to ask. And there you have it. Eight actionable ways to increase your cash flow and keep your business thriving.
00;05;20;14 - 00;05;48;25
Aubrey Philipp
Remember, cash flow management isn't just about keeping your head above water. It's about creating the financial stability and freedom to grow. If you found this episode helpful, don't forget to subscribe, leave a review, and share it with fellow entrepreneurs. For more tips and resources, check out our website at www dot Kickstart Accounting Inc dot com. Thanks for listening! Until next time, take control of your cash flow and take charge of your business
00;05;48;25 - 00;06;01;10
Aubrey Philipp
success.