Invoicing and bill management go hand in hand. As you may have guessed because you need the income to cover your bills. If income is late and you do not have reserves built up, you may pay your bills late.
You will need reserves between invoicing and bill management.
Buildup reserves to make it easier to wait on receivables. Even those that earn $100K plus a year in income must wait on receivables to pay bills. Monetary reserves will help to tide you over by tucking away the profit. Yes, profit. Consider only paying out profit at the end of the quarter, every six months, or the end of the year. Profit is not a salary or draw.
Business is a cycle. As business owners we sell but we are also consumers. We buy from others to produce the product and services that we sell. Many business owners, on the sales side of things, often are afraid to collect payment or to say their sales price. I remember, as a new business owner, I wanted to offer low pricing but I quickly realized that I had to choose between quality and prices. Offer lower than market pricing sounds good until you realize you can’t make a profit. I transitioned into quality package services or looking at the big picture for my clients as well as the details.
Yes, it is possible to see the big picture and the details. As I build up an invoicing plan and help my clients pay their bills timely. I also work to make sure I pay my bills on time. My receivables are due before my bills. So I don’t have to pay the bills late. I also create spending plans. Because without my vendor services I would not have access to what I need to sell my products and services. However, I know my clients may have ups and downs as well. Here’s where the profit or business expenses markup comes into play. If you have sufficient reserves you can cover the slow months without harming your payor payroll. And you can cover your bills for personal living as well as running your business.
Get The Monthly Newsletter