Archive for November, 2008


Does Your Client Pay Slow?

If your clients pay slowly, here’s how to collect client pay faster and with less effort.

There is a growing trend among companies to pay later and later. What was 30 days to pay is now becoming 45. Those previously at 45 are going to 60. Worse, small companies are typically targeted first. Here’s what you can do to speed up clients who pay slow:

  1. Get paid at time of service. If your service is completed on the same day you show up, request payment immediately. You’ll need to ensure the client is there to pay you or get credit card authorization before you start. This works well when dealing with individuals as clients, but is a little harder when working with a business.
  2. Invoice early and often. For longer projects, you will want to have progress payments. Make sure your project is broken down into small enough segments so you can bill about every 2 weeks.  So even if your clients pay slow, you’ll have started the pipeline earlier.
  3. Begin charging a down payment on start of project. You can typically charge up to 30% to start the project, especially if you have materials to buy for the client.
  4. Reduce the amount of credit you extend. If a client’s receivables become too large, request payment before signing up for any new projects. Be respectful, this is probably one of your larger clients and you value the relationship.
  5. Keep better records of shipments and deliveries. Companies strapped for cash will claim they didn’t receive shipments or give spurious complaints to delay the time to pay. Make sure you are keeping delivery receipts, service authorization records, and correspondence about the project.
  6. Start a credit and collections activity system. If you are not getting an Accounts Receivable report from your accounting system, start immediately. There’s not a lot of time involved if you systematically follow up with clients after 45 days, 60 days, 75 days. Call them with a friendly reminder, ask about the payment. Specifically, ask them when you can expect payment.
  7. Have a credit policy. Specify your payment terms, how they can pay you, and what will happen if they don’t pay on time. Write these down. You can include them in your statement of work, your original proposal or even summarize verbally. You don’t want to appear heavy handed, just business like, so don’t make a big issue out of it.

Systematically working through these ideas will dramatically reduce your slow paying clients.  Collect your client pay sooner following these hints and turn your slow paying clients into fast paying clients. While there’s no quick fix, you’ll see results in just a few weeks.

Now stop reading about slow paying clients and start doing! Let’s create your personal profit strategies for growing profit today. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at 888-920-2030 or by email at

“Seek new clients, seize better income, capture more profit”

Better Cash Flow – 11 Ways Small Businesses Conserve Cash

Let’s talk about better cash flow – how to hold onto and conserve the cash you have on hand. This is not about cutting expenses; see Cutting Costs Now: 9 Hot Areas for Creative Small Business Owners. This is about holding onto your cash for as long as possible. For ways to collect cash faster, see 14 Ways to Collect Cash Faster.

Better cash flow can be achieved if you:

  1. Barter. Small businesses find that trading for goods and services will not only conserve cash; but also can substitute for borrowing and rack up savings. You don’t have to find a company to trade directly with; just join a barter network. Joining a group such as Corporate Barter Network gives you hundreds of local businesses and thousands nationally. In addition, they open your account with a credit so you can get started if there is something you need before someone else buys from you.
  2. Ask for credit terms. Many bills can be paid in 30 days. But be sure you pay on time or your credit agreement could be removed. You want to keep that relationship on an even keel as well as avoid late payment charges.
  3. Pay when bills are due, and not before. To save time, you can write your checks every week, but don’t mail them until two or three days before they are due. The time frame depends on the mail delay.
  4. Create a forecast of incoming and outgoing cash expected for the next three months. Continue to forecast your cash flow monthly to ensure that expenses and planned expenditures are in line with accounts receivable. Avoid using your credit line if you can.
  5. Create a 30-day wish list before committing any new spending. If there is something you think your business needs and it is NOT directly related to delivery for a customer, pause before buying. You’ll get better cash flow by slowing your spending decisions.
  6. Remove discretionary spending authority. If anyone besides you makes purchase decisions, say your spouse or your assistant or a partner, agree that nothing will be purchased before specifically discussing it. This may seem like a small thing especially if we’re talking about postage or office supplies, but can conserve cash and possibly reduce spending.
  7. Create a self-imposed moratorium on new spending.  Unless you can find something else of equal value to remove or suspend. This exercise will help you rethink if the new item is going to provide enough value to supplant something else. For example, if you want to add a marketing campaign which costs $100 a month you might find a way to cut your telecom costs by $100 a month.
  8. Cut Inventory. Think you don’t have any inventory if you are a service business; what about office supplies? Buying just what you need for the moment, conserves cash and keeps the employees and yourself from taking them home for needs there.
  9. Buy Used. Furniture Soup here in Reading sells previously enjoyed furniture at dramatically discounted prices. Other items typically available used include books.
  10. Re-negotiate with your suppliers, lenders, and landlord. You value these relationships and so do they. Ask if there is anything you can do to pay on a slower schedule, remove travel charges (hey, gas is down 50%), or reduce shipping charges.
  11. Implement a cost cutting program with a top 3 list. For a simple system, see A Cunning Cost Cutting System for the Busy Business Owner. This way you’ll consistently cut costs without losing focus on building your customer base and keeping up revenues.

So summing up, better cash flow comes from spending less, spending slower and speeding income.  See Does Your Client Pay Slow? for more on speeding income. Give me comments below. What’s happening with your cash flow?

Now stop reading about better cash flow and start doing! Let’s create your personal profit strategies for growing profit today. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at 888-920-2030 or by email at

“Seek new clients, seize better income, capture more profit”

A Cunning Cost Cutting System for the Busy Business Owner

Smart small business owners are finding ways of cost cutting in their businesses. You don’t have to be struggling to think cost cutting is a good idea in this recession. If you want to thrive not just survive, here’s a system for cutting costs with just a little time.

These days it’s cool to be a cost cutter. Profitable business owners are cutting costs as prevention against possible decreases in sales so they can preserve cash. Struggling business owners, already seeing sales decreases, are cutting costs to keep going. Either way, here’s an easy, foolproof system.

Spend just 10 minutes a day and contribute thousands to your bottom line.

  1. Create an excel spreadsheet of all known recurring and expected one-time costs. Separate out monthly, quarterly/yearly, and emergency spending expectations. Don’t try t make it a budget; just write down recurring items and their approximate monthly cost.
  2. Write a goal. Here’s an example. “I want to cut $2,000 a month from my operating costs by Jan 31.”
  3. Think of 3 specific items you believe have immediate cost cutting potential. Write them down on ‘My Cost Cutting Success List’. This will be your focus list. Write them as an action verb and cost cutting target amount. Example: “Install thermostatic timers in warehouse to save $150/month. “
  4. Create a list of 10 items you are thinking about cutting after your initial focus list. Do not number or prioritize this list, just put down your ideas.
  5. Post your ‘My Cost Cutting Success List’ where you’ll see it every day. Put it on your desktop, on your refrigerator, in your day timer.
  6. Put time on your calendar to make it happen. Schedule yourself a half-hour twice a week to take action.
  7. Work on one item on your focus list at a time. Make the phone calls, research lower cost alternatives, make a decision. Drive an item to completion.
  8. Delegate where you can. Maybe an employee can research alternative credit card processors and send you the links or make a file. Perhaps a spouse can call and cancel an ineffective advertising service.
  9. If you get stalled, work on the second item. Sometimes you have to send in something by mail or wait a week for a response. Don’t get stalled; that’s why there are 3 items on your focus list.
  10. When you finish an item, put a checkmark next to your completed item. Update the amount saved if different from your initial projection.
  11. Relish the accomplishment for a day or more. Don’t take the item off the list for a little while. Reward yourself with a feeling of accomplishment by seeing your success the next few times you look at your list.
  12. After a few days, Move the Completed cost cutting item down to the Cost Cutting Success List. This is important; you’ll see your efforts pile up so your small efforts will result in big results.
  13. Pull an item from your wish list that you think has the biggest, easiest to implement cost cutter. Write it on your focus list.
  14. Add items to your wish list as you read, talk to friends, think about your cost cutting progress. Now that you are in action on cost cutting, you’ll have ideas showing up in your life. Just jot them down on your ‘My Cost Cutting Success List.’
  15. Get a partner. Most exercise programs are more successful with a partner. Find someone to bounce ideas with, share your success, and get inspiration. Call them and share a success or get encouragement.

In just 10 minutes a day, you can cut your business costs by thousands of dollars. This system is foolproof! Call me if you want help getting started or for a copy of your ‘My Cost Cutting Success List’ Worksheet.

 Merra Lee Moffitt, AWMA, CMFC, CFP® spends all day, everyday helping business owners reach their financial dreams and goals by capturing business profits. She can be found at, 888-920-2030 or by email at

Posted by Merra Lee Moffitt, CFP under Collect Cash Tags:  •  2 Comments

14 Ways to Collect Cash Faster

In this new era of difficult credit, cash is the life blood of your business. In this series of articles, we’ll look at bringing in cash faster, keeping cash longer, and increasing cash holdings.

Bringing in Cash Faster 

  1. Have orders faxed to you, that way you’ll deliver and bill sooner.
  2. Send your invoice the same day the product is shipped or the service is delivered. You can prepare it ahead of time. Just date it and mail it on that date if you want to batch your invoices to save time.
  3. You can also email rather than mail your invoices. That will speed collections. But beware that many business owners are trained to handle the mail. An email invoice could be missed because it’s not part of the normal flow.
  4. Indicate clearly on the invoice when the payment is due. You can indicate when the payment is considered late and state what the late interest is. But make sure you can back that up.
  5. Know how the customer pays. When you began working with this customer, you can ask them what their normal pay cycle is. Some pay once a week, others on a certain day of the month. If you note that in the file, you’ll have a better expectation.
  6. Don’t let invoices get too old. If you’ve forgotten about an invoice, chances are the client has too. When sending a second invoice, include the note, “courtesy copy. This invoice is past due. Please pay promptly if you haven’t already.”
  7. Establish a regular procedure. Mail invoice copies at 30 days, 60 days, and 90 days. Call at 45 days, 65 days and one last time at 90 days before going to collections.
  8. Check customer satisfaction. Make sure they are happy with your work. If you do this early in the payment process, they’ll be more likely to remember that 99% of the work was satisfactory rather than dwell on that minute item.
  9. Put their phone number on the invoice. Statistically, that has improved the collection rate and speed.
  10. Follow up with a phone call. Call after 45 days. Find out if the payment was missed, by them, lost in the mail, or maybe even by you. When possible, give them the benefit of the doubt.
  11. Take a portion at the start of the project. Invoicing for part of the project at the start will cover the cost of materials as well as make cash come in faster.
  12. Accept credit cards. If you don’t already, begin taking credit cards. You generally get your money in 24 hours at a nominal cost of about 2%.
  13. Keep your Accounts Receivable report up to date and review it weekly. QuickBooks produces these with a few clicks.
  14. Beware of subcontracting. Sometimes working for someone who works for someone just seems too remote. Review their payment terms and yours at the start of the relationship and again at any time there seems to be a delay. Just letting them know you are on top of it can be the key to having your work paid on time.

Creating a system, watching the details, and maintaining good relationships with your customers will help collect cash faster, speed dollars to you, and improve overall cash flow.

A very good article for improving cash flow for contractors can be found at:

Merra Lee Moffitt, AWMA, CMFC, CFP® spends all day, everyday helping business owners reach their financial dreams and goals by capturing business profits. She can be found at, 888-920-2030 or by email at

Posted by Merra Lee Moffitt, CFP under Collect Cash Tags: , ,  •  1 Comment

Cutting Costs Now: 9 Hot Areas for Creative Small Business Owners

 In good times and bad, it is always a good idea to look over your business costs. Keeping an eye on the bottom line means watching both the income and the expenses. Here are the hottest ideas my clients are implementing right now.

  1. Get rid of your long distance provider. VoIP has come of age; the reception is clearer and reliability is greater than even a couple years ago. A number of my clients have removed their home/business land-line phones in favor of VoIP phones and cell phones. The VoIP phone works fine as long as your Internet is up. Check out Skype or Broadvoice. We use BroadVoice Unlimited World Plus at
  2. Put in a thermostatic timer. Heat your house/office/home office to 62 at night and your home office to 68 only during the morning and evening hours when you are using the whole house. If you sit in an office during the day, just run a small electric heater in that room with the door mostly closed. The cost of running a portable 1500 watt space heater for about 5 hours daily during a 30-day month is $9 (at a typical 10 cents Kw/Hr). A heat pump covering the whole house can be 10 times that much. See
  3. Check your credit card processor. Generally, a 2% fee is pretty good. If you are paying substantially over that, you may be paying too much. A good, quick explanation of fees can be found at:
  4. Save on Gas. The website below shows the daily price for fuel in your area by zip code. The difference in our area between the highest and lowest was 29 cents a gallon, about $5.80 per fill up if you have a 20 gallon tank such as a business Small van or SUV.
  5. Avoid new debt. Companies that fail to control costs often increase debt. The interest cost and monthly payment on that debt then becomes another cost, which cuts further into profits. Catch the trend early by watching your business dashboard. See my article on business dashboards at
  6. Barter. It not only helps you conserve your cash, but can help sell more of your products or services. Join a barter network, such as Corporate Barter Network at and you have thousands of businesses that trade between each other.
  7. Ask your employees. Your employees know the ins and outs of your business and are often willing to share. You don’t have to pay a lot for their ideas. Simple gifts like a box of cookies with public recognition will help your employees feel appreciated. Don’t be afraid to ask them for fear of spreading concern; a good business owner is always looking to be more profitable. A suggestion box with forms nearby will make it convenient. It may take a couple months for them to supply you with ideas, but keep reinforcing it and they’ll catch on if the spirit is positive.
  8. Track your costs. Set aside time each month to look at costs with an eye to finding some area, no matter how small, along with a willingness to keep an open mind. You’ll be surprised at what you’ll find each month.
  9. One step at a time. Pick one thing to do each month. Small business owners already had a full time job before taking on cost cutting. Also, while very important, you don’t want to take so much time that sales suffer.

It has become very trendy to be a cost cutting business owner. Join the trend and see your business profits improve even if your sales are not.

Merra Lee Moffitt, AWMA, CMFC, CFP® spends all day, everyday business owners reach their financial dreams and goals by capturing small business profits. She can be reached at, 888-920-2030 or by email at

Posted by Merra Lee Moffitt, CFP under Collect Cash Tags:  •  3 Comments

2009 Tax Changes Every Business Owner and Employee MUST Know

Your money might go a little farther this year, thanks to new raised limitations of several common IRS deductions. Use this information to plan your savings and contributions and to take advantage of what good news there is going into 2009.

1. The maximum earnings subject to Social Security tax is now $106,800. The Social Security tax rate remains at 15.3%.

2. The maximum annual wage that someone under the normal retirement age can earn without a reduction of Social Security benefits is raised to $14,160.

3. The SSI COLA is 5.8% for payments beginning January 2009. Welcome relief in Medicare premiums is that these premiums will remain the same in 2009, now at $98.60.

4. The 15% marginal income tax rate begins at $16,700 taxable income for Married Filing Joint (MFJ) and $8,350 for single. The 25% marginal bracket begins at $67,900 MFJ and $33,950 single. The 28% marginal bracket begins at $137,050 MFJ and $82,250 single.

5. The personal exemption for 2004 is now $3,650. The standard deduction for Married Filing Joint (MFJ) is now $11,400 and $5,700 for single filers.

6. The business auto mileage deduction is now .58 cents per mile. In fact, that rate began July 1, 2008.

7. The child tax credit remains $1000 per child.

8. The long-term capital gains tax rate remains 15% if your marginal tax bracket is higher than 15%. It is 5% if your marginal tax bracket is 15% or lower. Qualifying dividends are now generally taxed at the same rate as long-term capital gains.

9. The Traditional IRA deductibility phase-out for MFJ has been raised to $65,000 to $75,000 and to $45,000 to $55,000 for Singles.

10. Eligibility phase out for Roth contribution begins at $105,000 for singles and for MFJ at $166,000. The Traditional and Roth IRA deduction maximums remain at $5000 with $1000 catch-up provision for age 50 and over.

11. The SIMPLE IRA deduction is now $11,500 with a catch-up provision of $2,500 for those 50 and over.

12. The 401K, 457,403(b) and SARSEP maximum contributions are now $16,500 with a catch-up increased from $5,500 to inflation-indexed if you are 50 or over.

13. The SEP IRA and Defined Contribution limits are now $49,000. The maximum salary that can be considered is $245,000.

14. Health Savings account maximum contributions for 2009 are now $5,950 for families and $2,300 for individual plans. Anyone age 55 or older can add an additional catch-up of $1000.

Merra Lee Moffitt, AWMA, CMFC, CFP® spends all day, everyday helping families and business owners reach their financial dreams and goals. She can be found at, 888-920-2030 or by email at

Posted by Merra Lee Moffitt, CFP under Small Business Taxes Tags:  •  No Comments