How to increase your cash flow with these 3 strategies

November 22nd, 2021 by Jennie Moore 6 minutes read

Have you ever asked yourself, how to stop chasing unpaid invoices and improve your cash flow?

The key to success in business lies not just with the service you provide, but also a structured payment schedule. If your client is unable or unwilling to set up an instalment plan for repayment (paying off what they owe ASAP), then this may mean that we're no longer able to work together because our relationship was only ever going one way--that means reassessment! So before giving out any more time without compensation-be sure there will be some kind financial commitment.

You have to ask yourself, what can I do before my client defaults on their invoices due to me?

Analyse your billing to help grow your revenue

The first strategy you can use to increase your revenue is by looking at what's happening with billing. Are we starting work before it even begins, or are we collecting payment after each task? Has anyone ever checked in with clients and had an agreement set up formally. Ensuring they're on board for this plan of action, and staff members will know exactly where everything stands.

Essentially you want to make the payment process simple for your clients. I believe that our clients do want to pay us, but often we are the culprits in making it difficult for them to do so. That being said, it is important that your onboarding process makes it easy for clients to securely provide you with their payment details. In addition to your firm receiving regular intervals of payments for services provided.

Some of the popular billing options that accounting firms use are fixed fee pricing, hourly billing, and the deposit or retainer approach. There is no right or wrong answer. However, if the goal is to secure monthly recurring revenue for your firm to minimize the administrative burden of invoice payment collection the fixed fee pricing method may be your best option. If the work is unclear and the depth of the work is not easily defined then a hourly model or deposit method may be recommended.

But what if you already have outstanding accounts receivables from clients? One option is to set up a payment plan to bring outstanding receivables up to date. This can easily be done with a payment plan engagement with Practice Ignition.

The secret sauce is to ensure new clients to your firm are onboarded with a defined engagement with payments enabled to deposit funds into your bank account in a timely manner. Then work on your aged receivables clients to implement an installment plan for outstanding balances and implement a new billing strategy like fixed fee billing to avoid aged receivables moving forward. Thus enabling your firm to begin building a strong cash flow.

Client email template

Let’s get you started on this new process by providing you with an email template you can easily communicate to your clients when switching to a fixed fee pricing plan using Practice Ignition’s new three option proposal editor.

Dear [client],

I’m so pleased to hear how happy you were with last month’s figures. We’re getting some great results on {insert topic} and it looks to be driving growth. [opening sentence personal and speaks to specific positive client experience/results.]

We’re proud to be achieving such great results for our clients. In order to ensure we can continue to provide exceptional service, we’ll be increasing the rates on all our packages effective 1 June. Some of our packages will also be tweaked to reflect the services our clients most need.

You can see the new packages and pricing here [link]. We’ll be rolling this out to new clients from June 1, however, we wanted to give you the first month on your new package at the current rate [offer for long standing clients] as a thank you for being such an amazing client!

This increase will enable us to continue to provide the quality and breadth of service you love. If you have any questions about the price increase or our new packages, don’t hesitate to let me know.

Yours Sincerely,

Your Name

Manage scope creep

How does one increase their firm's cash flow? Which leads us to our second strategy, the answer is by managing scope creep. When you align work with a tight engagement, then the profitability will balance out and things can operate more smoothly for everyone involved!

Technology can help with managing and monetizing scope creep. In my firm, Moore Details we leverage Practice Ignition for our engagements as it connects to workflow templates within Karbon which ensures that the work my team is responsible for doing complies both internally as well as externally if a client asks them outside of their normal procedures – an internal discussion will occur where we notify clients about any potential cases or revisions before proceeding accordingly.

This has been so effective that I’ve been able to issue an engagement change from the comfort of my camping trailer while in the woods in under five minutes!

Find the right clients for your firm

Our third strategy is attracting the right clients to your firm will not only make your day to day more enjoyable but profitable. In this digital age it is important to have a digital presence to attract customers anywhere. But a digital presence is only one step in amplifying your services as a trusted advisor. To seal the deal you will need to equip yourself with an easy to use proposal process which collects payment information, defines the scope with a clear engagement and connects to your firm's workflow platform to ensure tasks are completed to delight your clients.

With Practice Ignition you can spark your onboarding process and delight your customers with a clean, crisp professional proposal in minutes. The video feature is my favourite. I can quickly customize a video using Loom (or another video platform) to explain my proposal to the client like I was right there in person with them. It's easy to upload a snappy corporate brochure created in Canva to wow potential clients. Wrapping up with enabling up to three service packages for the client to choose from that suit their needs and budget.

Let’s recap on the effective strategies to stop chasing customer payments and improve your firm's cash flow.

Strategy 1 - Look at your billing methodology and access if it is working to minimize accounts receivable and maximize cash flow.

Strategy 2 - Manage scope creep.

Strategy 3 - Attract the right clients.

In closing, following the above three strategies will help you go from debt collector to trusted advisor. Taking the time now to improve your onboarding process will impress new clients and build a stronger clientele to grow your business as your clients' needs change.

To support you on this journey, consider adopting a solution like Practice Ignition’s client engagement and commerce platform. The software comes with everything you need to engage and retain clients. From proposals and engagement letters to client management and billing, Practice Ignition is here to help you build win-win relationships with your clients.

Start a free 14-day trial today and see how our platform can help your business grow.

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