This year has gone by way too fast. We’re already in the second week of December and 2014 is coming to a close. For many businesses, the end of the year also marks the end of their financial calendar and it’s time to close the books. Many companies celebrate this time, but I have a client who dreads year end because he always finds himself in a backlog of billing.
The problem for this client is that he has a law firm that bills by the hour. His associates are always so busy, they forget to enter their time and the office manager, who isn’t very aggressive, doesn’t press the matter. So what happens? There’s a backlog in billing and a cash flow problem. Here’s what I did to help him fix this problem:
- SET UP A BILLING SYSTEM – If your business bills by the hour, then set up a daily billing system. This will require your associates to enter their time every day for each project they work on.
- BILL MONTHLY OR PER PROJECT – Billing by the hour is out of date. Offering a monthly or per project fee can result in repeat business, and if you set up the structure correctly it can be much more lucrative than hourly billing.
- DON’T PROCRASTINATE – Meaning you need to make sure you follow up with your staff on the status of their cases or projects. Ask your associates how many hours projects will take for completion and what time and decisions are still remaining. Remind your associates that an invoice needs to go out and to input their hours regularly, preferably daily.
- ACCELERATE YOUR INVOICING – Accelerating your invoicing is a key to positive cash flow. If you bill by the hour, ask for a retainer before you begin the work. If you bill a flat fee, you can ask the client to pay 50% upfront and 50% at time of completion. Once you’re done internally with the project, let the client know you’re in the final stages of the project and send an invoice out immediately.
- WEEKLY CASH FLOW BUDGET – Having a weekly cash flow budget is essential to maintaining positive cash flow and in avoiding a backlog in billing. Make sure your budget looks no less than 12 weeks out. This cash flow budget time frame allows you to make sure you can pay rent, make the payroll and pay all of your vendors.
My client with the law firm and backlog in billing no longer has a problem with cash flow or unpaid invoices. He hired the Brigade Bookkeeping team and now has an entire army to implement some of the solutions above that we shared with you.
If the end of the year has you feeling stressed out because of a backlog in billing, then call or email me now. We can help you turn that bah-humbug feeling into a you’ve got that holiday feeling.
Have a productive week everyone!
