From Contractor Magazine, here are some simple accounting tips that contractors can use for cash flow planning in their business.
Collect payment on completion of the work – Make sure your invoices clearly state the payment terms and due date. If your client hasn’t paid you by day 30, or 60 — make sure you are on the phone with them immediately the first day the invoice is past due.
Accept both credit and debit cards – Your customers want to pay you, but you have to make it easy for them! Keep your cash flow in check by offering multiple options for payment.
Incentives for early payment — Offer a discount to your customers if they decide to pay early — say, 10% for payment before the their invoice is due.
Negotiate payment terms with suppliers — If you have a good relationship with your suppliers, it might be helpful to the cash flow of your business to negotiate favorable payment terms. Sometimes a 45 day payment window instead of 30 days might mean the difference between cash flow negative and positive.
Secure a business line of credit — Sometimes cash flow can be tight. When that happens, it’s helpful to have a backup plan– your credit line. Having a credit line for short-term gaps in cash helps you manage the cash flow of your business.
For more accounting best practices and cash flow tips for contractors, check out the full article from Contractor Magazine.