Would you like to boost cash flow to your CPA firm?
Sure you would. In any business, cash flow is king.
That said, here’s a good reason to read and bookmark today’s blog post: chances are, you’re overlooking some simple ways of boosting your cash flow. And we’ve got ten of them right here.
1. Speed up Your Accounts Receivable Process. One of the biggest issues for many CPA practice owners is the length of time it takes for their accounts to pay their bills. What can you do to speed things up? Try these:
- Send invoices immediately
- Consider shortening your payment terms to 30 days from receipt
- Consider offering a percentage discount for early payment
2. Encourage Credit Cards. There are three good reasons to encourage clients to use their credit cards to pay you. They are:
- Credit cards can speed up the payment process.
- They can also be taken at the same time as delivery of services.
- Credit cards can reduce bounced checks and bad debt due to non-payment.
3. Leverage Interest. For your firm’s cash assets, consider leveraging a high-interest savings account. Earn money on your money when it’s not in use.
On the flip side, when borrowing, if possible, use long-term debt instead of short-term debt. Seek interest on debt that is helpful — interest that you can deduct. Also, evaluate your interest payments regularly to ensure you’re paying the lowest rates possible.
4. Offer Incentives for Recurring Services. Consider offering incentives for monthly services. This will ensure that you have regular, repeat business without having to spend time or energy contacting customers for additional revenues.
5. Have Regular Fee Increases. You’d be surprised how many CPA firms forget to increase their fees regularly.
6. Negotiate Vendor Contracts Regularly. Re-price all your purchases from vendors at least semi-annually. That way, you’ll be sure to get the best available prices. They’re certainly not going to contact you when their prices decrease!
7. Amortize your Expenses. Consider leasing equipment instead of buying it or if you purchase it, then finance it at the current low rates.
8. Keep Supplies Efficient. Don’t keep more supplies around than you need. Tighten your ordering system to cut costs.
9. Monitor Your Receivables. Stay on top of the money that’s owed to your firm. Sounds like common sense, right? But you’d be surprised how many practice owners let money that’s owed to them fall through the cracks every month.
10. Push the Limit on Your Payables. Keeping in mind that business is business, push your payables out as much as possible so that you can hang on to your valuable cash.
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