Welcome to episode 52 of Season 2 of Baktari MD! In this episode, we go over CASH FLOW, and how to help it grow your business! Getting consistent cash flow when you start a business isn't easy, but it can be after you listen to this video! All of the tips and tricks you need are right here! Find out all of this and more in the full episode!
Welcome to episode 52 of Season 2 of Baktari MD! In this episode, we go over CASH FLOW, and how to help it grow your business! Getting consistent cash flow when you start a business isn't easy, but it can be after you listen to this video! All of the tips and tricks you need are right here! Find out all of this and more in the full episode!
It’s the not knowing that when and how the revenue is going to come in. That almost paralyzes you and prevents you from making great business decisions that can actually grow your company exponentially. Hi. Welcome to another episode of Baktari MD. As you know, this season we're doing Crash CEO School, where we go over all the skills you need to take your organization to the next level. Today I want to talk about cash flow. As you know, cash flow is the lifeblood of any business, any big organization. A lot of times, you know the products and expenses that you have to pay for to get what you need for your clients doesn't match up with them paying and the revenue coming in. And while your business may even be a success, cash flow can potentially bring your company down or cause significant troubles or damages. So let's talk about some basic strategies to improve cash flow. So I want to talk about six things that can materially help improve your cash flow. And by the end of this video, hopefully if you implement any of these six things, and the last one, I think is probably the best one, the cash flow for your organization should dramatically get better, and if the cash flow gets better, you actually have more power. You have more power to do things. When your cash flow is better, your it's easier to hire. It's easier to buy new equipment, take on other expenses that might help your organization more marketing, what have you. So cash flow can actually exponentially improve your company even beyond the actual cash that you're getting. So let's talk about cash flow. Now some of this may apply to your industry or your company, but it's still important that we go through them. This first thing I want to talk about is terms. Unless you're a company where basically people pay for your product at the time that you're delivering it or service you. a lot of businesses rely on billing and getting paid and the agreement you write for that, meaning how you get paid and how long they have to pay you can be dramatically different. But let's talk about that. You know, certain industries, it's very common to give your clients 30, 60, maybe even 90 days terms. Well, what I have seen in many industries is that even though that's a legacy thing that we've always given our clients 60, 90 days, that it's it's actually okay to go back to your client base and say, you know what? Because of changes that we've had, we're actually going to be reducing that. I think there's a lot of trepidation to do that, but I've been surprised how not happy, but at least receptive they are. That organizations do change their terms of payment. So first in your organization look at that and see what kind of terms you're giving and what can you reasonably cut back to maybe 30 days or 60 days. That's the- That’s the first line. But even beyond that, whatever the terms are, there's two ways that it can go. So if your term is 60 days, what happens in 60 days? So this is number two. Who decides when you get paid even if the terms are 60 days or 30 days? If you're set up in a way where the client decides, oh, it's 60 days, let me pay this vendor versus you automatically charge them at 60 days. That's a world of difference. So the second major hack or thing you can do is as best as you can to convert those clients to automatic payments that can be easily done by filling out the right form, setting up the right bank accounts, or, working with Authorized.net or your credit card processor so you can charge your clients based on the contract or agreement they have and based on the ACH or credit card agreement you have that they get automatically charged on the day they are due, and they get invoice the same day. We've done that with multiple companies, and it really makes a huge difference, because you can then rely on that revenue to come in on that day. Now, are there certain times where the ACH doesn't go through? Yes, possibly, but much, much lower rate. And you can, for the most part, count on the bulk of the money coming in that day. So you can actually say, hey, you know, on the second of the month, we're going to have, you know, 50,000, 100,000 that's going to come in. So let's think about what we're going to do with that money or that revenue. So, automatic payments is a real must. The blowback I hear a lot of times is, oh, our industry, we're not our clients are not going to be used to automatic payment. Well, what I have seen is that, you know, industries change, and you may have to be the one that sets, you know, becomes the the the person who breaks the rules and restarts a new trend in your industry. Okay. So you can, you know, break new ground and be the first one in your industry. And I'm surprised how many people get that, because I think we've evolved into this system of commerce where a lot of people are used to getting charged. Whether you get a subscription to any kind of service, even your YouTube subscription, you whatever, or Netflix, you know you're going to get hit on the third of every month or the eight of every month. So I think people are more receptive and now, maybe even in a business sense, to pay automatically and maybe get the invoice same day, but get paid, but pay automatically So again, setting up your clients on automatic payment either through a credit card or hitting their business bank account is an excellent way to address that. And I think people are much your clients are going to be much more receptive to that than you would imagine, especially if you tell them that that's a decision you've made. That's how your business is going to operate. There won't be any other options. You'll be surprised at how many people will will be okay with a adoption of that strategy Next thing is, you know, to give a discount if people pay on time, that's of course, if you can't pull off the automatic payment, which of course I highly recommend. But one strategy is to, maybe, you know, raise your fees a little bit to begin with and then offer a discount if they pay on time. So whatever you would charge for that service, you increase the, let's say 3% and an offer that is the new price, and then just offer a 3% discount if it's paid by the date, it's not going to be as ideal as having an automatic payment. But until you get automatic payments until you're there, that's a great strategy. But you got to be really good, because I think if you do have that, discount and people pay late, you have to go and not offer the discount. You may do it one time, but once people figure out that that that discount is there, no matter when they pay, as long as they call you whatever is going to lose its, credibility. So think about that. So an automatic pay on time discount, but you have to really commit to it. eNational Testing makes getting a simple laboratory test as easy as ordering something online. With three simple steps, you can have your test ordered for STDs, general health, allergy testing, diabetes screening, blood titers, and more! 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And what I recommend is to have an automatic shut off of other services or future services that's built into the cake, because when you leave that discretionary, in other words, if they don't pay and some of the companies got to decide, okay, well, I call them that will be here next week. Really, what we have found is an automatic shut off of future services that's out of any one person's control. Actually sends a message that it really matters to pay on time and that the system is built into shut everything off. So if there is a way to build that into your system where access is turned off or whatever, or future deliveries are not done until that’s paid, it's interesting because you would think that that might be inflammatory, but really, once it happens once or twice, people know it and then they are actually more inclined to pay on time. So again, this is not as good as the automatic payment. But again, if you have to live with it, these are some of the things okay. So the last sort of hack that I want to talk about to improve cash flow is to look at the products and services you sell and see what in your repertoire of products or services, can you convert into something that people can pay a monthly fee to? As you know, many software companies and technology companies have moved from charging for their services like, you know, Microsoft, YouTube, Adobe to charging a monthly fee for a product of services rather than charging you a la carte. So if you look at your the repertoire of things your company does and say, look, is there a package of things that we could charge a monthly fee? So we're not billing a la carte, right, so, and again, I'm surprised that how many people think they don't have something, but they actually do. But it's probably maybe new to their industry to do it. But there's nothing wrong with being in the forefront right? There's nothing wrong with being a trailblazer in the industry. Right? And, you know, for the longest time, you know, many, you know, Adobe, you would buy a version and you would buy the next version. And they did that forever. And then one day they’re like, you know what though, we'll forget about that. Why don't we just charge a fee for the latest version? We'll keep updating the version, but we'll just get a monthly fee. And what they realized that those monthly fees were even more than selling. You know, every version of Adobe or Microsoft Office or what have you. So we can take a page out of that book and say, are there services that we have that we can translate into a monthly package that gives value and, you know, takes out the, the, all the billing aspects of it and it can you imagine selling every little widget or every Adobe version having a separate transaction versus, you know, we're just going to charge you one monthly fee and that's it. I think the the real issue is people think that it doesn't apply to their industry or what they're providing. But I see in the automotive field where they say, you know, instead of, paying for repairs, you know, we'll just charge you $200 a month and anything that breaks on your car, bah bah bah bah bah. I've seen dealerships do it. A lot of companies who maybe five, ten years ago would not have thought of packaging a bunch of stuff they do and charging a monthly fee. And what they’ve realized, though, is that monthly fees actually add up to a lot more. And the other thing about it, it’s consistent. You know, you can bank on that revenue. You know, this money's coming in month over month and how it's growing and what you can do with that money. Remember, money revenue is power, right? If you know how much cash is coming in and you can forecast it for the next 12 months, that gives you a lot of power and flexibility in your business to maybe hire more people. buy more technology, invest in your company. It’s the not knowing that when and how the revenue is going to come in. That almost paralyzes you and prevents you from making great business decisions that can actually grow your company exponentially. If that makes sense. So predictable revenue is power and it translates, and it has impacts in ways above and beyond just getting the money. If that makes sense. I hope this helps you. Try to see how much of this applies to your industry. Please leave comments. Also like and subscribe if you like videos like this so we can continue making more content like this. I really appreciate it. Until the next video. Thank you so much. We'll see you soon. Take care. Bye bye.