Charles Leikauf, a fractional CFO, explains why cash flow problems usually aren't about making enough money. Sixty percent of small businesses with outstanding receivables have invoices overdue by more than 30 days. He recommends tracking what you're owed, setting clear payment terms like five-day invoices, and assigning someone to collect.
I'm a fractional CFO who helps people run their business with less money, but then they get to take home more of it. So one of the things that you can do is called a working capital optimization. And one of the reasons why it's so important is because you need a certain amount of money to grow your business, right? You got to keep a certain amount in the accounts. Some's coming in, some's coming out. I can show you how to lower that. Hi, I'm Charles. I'm a fractional CFO and I've helped hundreds of businesses grow their business and get clear on their financials. And so when we look at a working capital optimization, 40% of all small businesses are owed money. 60% of those 40% haven't collected, have overdue receivables by 30 days. What does that mean is that they're owed money and that person is over 30 days late in paying them. And so what you can do is when you want to collect a little bit sooner is I want you to go over all the money that people owe you. I want you to put it in a spreadsheet and I want you to have a better process on collecting it. So you collect on the money that's overdue, call them, text them, email them, suspend services, whatever you do to get the payment. That's number one. Number two, we want to make sure that doesn't happen again. In order to do that, you need three things. You need the process, the policy, and who's responsible on collecting. So the policy is, hey, everyone has to pay within 5 days. The process is how do you you collect on that and what happens when the person doesn't pay. And then the third thing is who's responsible for it, right? There's usually someone on your team. Is it you, the business owner, or is it someone who works for you? When you have the process, the policy, and who's responsible in place, that is the easiest and fastest way to go and collect on overdue receivables.
