“On Thursday night she looked a fright. Her pricky hair all curled, oh what a sight. Dance, dance, little sister, dance.” -The Rolling Stones
Recently, the cash flow dance has come up for a couple of business owners. I see this frequently when a business grows….they’re used to paying their bills on the 1st of the month (or 5th or whatever) and as they grow, so do their expenses, and they can no longer do that.
They’re investing in their business, in their team, in themselves, and paying everyone on the 1st just doesn’t work anymore.
Nothing is wrong with this! It doesn’t mean you’re a bad business owner, or the business isn’t running correctly. It doesn’t mean the expenses are wrong and shouldn’t be there. This is something that all growing businesses deal with! Even successful companies who’ve been around for decades still do the cash flow dance. Don’t make the cash flow dance wrong.
The cash flow dance just means you can’t put cash flow on auto-pilot anymore. It’s now something you have to pay attention to. We’d all LOVE to pay our wonderful vendors on the 1st and be done with it for the rest of the month! That would be great but it’s just not reality.
If you have someone on your team paying your bills for you, empower them to use their critical thinking skills instead of being a robot. Think about putting your vendors into 3 different categories and communicating which vendors MUST be paid first, second, and third. The first category may be employees and the bills that keep the lights on. If the bank cash balance is below $X, then this first category is the people who get paid. As cash increases (or reaches) $X then this second group of vendors gets paid, and then the third. I would alternate vendor payments with payroll weeks so it doesn’t all hit at once.
You may consider talking to your vendors about their payment terms. The invoice says due by the 1st? Ask them…what if we pay you on the 7th instead? If you’re a good client and have been working with them for a while, I’m sure they’d be willing to have that conversation!
As the business owner, I urge you to schedule a weekly “Money Date” with your business. Make it fun! Have a fun coffee to drink, light a candle, and just make it a weekly event you enjoy. Think “Money Monday” or “Cash Flow Friday” and put it on your calendar every week!
The goal is to get you in a sweet spot with the cash flow dance. Then as you grow, add more expenses, change vendors (all the things) you’ll need to adjust and evolve the cash flow dance. Maybe even learn some new steps! One thing I’ve learned in business is that things are always changing! Let this process grow and change with your business. Find what works for you!
Still need some help? Let’s chat- your success is inevitable!
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