When a business is having cash flow issues, the chances are high that they don’t…
The Irony of Being the Cash Flow Queen
I’ve been called the Cash Flow Queen for some years, however, until recently I didn’t feel comfortable with it.
You see, I have struggled with cash flow issues in my business, and hence I didn’t feel it right to claim the name for myself. My cash flow issues started with clients not paying their invoices. I had clients who paid their invoices immediately, I had others who paid end of the month, and others who paid but always a bit late and others who paid very late. But the biggest challenges came from the clients who just didn’t pay at all.
Now as an accountant it’s interesting when dealing with outstanding invoices, because I actually knew the state of their bank account and how they didn’t have the money to pay. It wasn’t the old ‘cheque’s in the mail’ conversation, it was a bigger conversation that needed to be had about prioritising payments and making sure that I would get paid at some point in the not too distant future.
Part of solving the problem of me not being paid meant doing further work with the client to help them solve their cash flow problems, but that meant more money owed to me. If I could help them get their invoices paid quicker, then there’d be more money in their bank account, and I could get paid; well that was the idea.
But it didn’t always work that way. In some cases, I’d put a hold on work and tell the client that until they paid the outstanding invoices, I just wouldn’t do any more work. But then they would need to provide financial statements to their bank to get loans (which were intended to provide funds to get me and others paid), or there’d be a tax audit, or the BAS would be due, or there’d be a refund due if the tax return was lodged or some other deadline that required work to be done.
And so more work was done, more invoices issued and then miraculously when it came time to pay my invoices, the money would go somewhere else. And therein lies the issue. When your DNA is wired to help people, you just can’t say no, even though you should, and so you do the next round of work and the amount outstanding increases and on it goes.
Being tough in business is tough. What’s really tough though is not having your invoices paid when the client brags about how they’ve paid down their credit cards, or when they’ve had a holiday … Need I say more?
The next challenge arises when your BAS is due, or the rent or the wages and you don’t have the money to pay it because your clients haven’t paid you and then the vicious downward spiral starts. And from personal experience, I can attest to how difficult it is to recover from this.
What I did learn from the experience is when to say no and what systems to put in place to ensure that the situation never occurs again. So yes, I’m the Cash Flow Queen and part of the reason that name suits so well is because I have had my share of cash flow crises over the years. What I do know is that with a bit of planning and focus, it doesn’t have to be like that.
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