Video Production Business Tips – Cash Flow Management Tips for Videographers

Video Production Business Tips - Cash Flow Management Tips for Videographers

Management is the key word in “cashflow management.” When it comes to solving cash flow problems every day, you must be persistent and methodical. Inexperienced entrepreneurs believe that increasing sales is the only way to increase cash flow. This is not true. You can improve your cash flow without increasing sales by following these simple steps.

Here’s how it works:

1. Keep track of the balance in your business’s checking account.

2. Note down the amount of money you owe on your bills and payroll for the next two weeks.

These are your current liabilities at the date of this writing. (I pay my employees every two months, so I use two-week intervals for amounts due in payroll and business bills.

3. Add today’s liabilities to today’s bank account.

This is your cash flow balance as of today. Your cash flow balance should not be negative, but it is possible. If your cash flow balance is negative, which it often will be, it means you will have to pay more payroll/bills within the next two weeks than what you have in the bank. Do you need to start cold calling until you make some sales? NO.

This will frustrate you and make you feel desperate. Instead of being calm, confident, and calm about your business, you’ll pursue it out of desperation. Negative emotions will only lead to more damage.

Before you worry about making additional sales, here’s how to “manage” your cash flow.

4. Consider the bills that are due within the next two weeks. They must be paid in two weeks.

Are you going to suffer if any of these bills are delayed for a week? Late payments on loans that could affect your credit, such as a bank loan or equipment loan, are not recommended. You can delay payment to certain vendors, such as freelancers or print shops, internet service providers, and others.

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If your sales pipeline is empty, holding a check for a few weeks can be all you need to get things back on track.

I don’t like being late with bills. However, you are in this business to make your life easier, not those of your vendors. While they play an important part, you must also ensure the company’s health. If your company isn’t in good health, you may not be able to pay vendors. They will work with you if you need assistance. It’s important not to abuse it. Don’t be afraid to call them before the bill due date to let them know that you will be late. They usually only need to make a phone call so that they don’t have to worry about why you haven’t paid your bill.

Are you still not convinced? Consider all the instances when your clients have not paid you on time. Sometimes the invoice is lost. Most often, it is because the invoice was misplaced. Don’t be ashamed, but don’t abuse it.

5. Once you have determined which bills can be delayed, take a look at your receivables.

What clients owe you money right now, and who should you expect to pay within the next two weeks? Send an email or call immediately to request payment status for any invoices due now and those due within the next two weeks.

Tell the second group that you will be looking at your books over the next two weeks. You want to find out if they can expect their check to arrive before the end of the 30-day period. They will need to locate your invoice in order to verify the payment status. They will often push for payment if they find the invoice.

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If they don’t locate it, they will let you know so you can send another copy immediately. Note: Keep a copy of your invoices if you send them by email. This will allow you to verify that the email was sent at the correct time. Ask the client to confirm receipt by sending a return email. Faxes are also accepted. This will give you something to stand on when they ask you to send them the invoice today.

6. After you have dealt with the immediate payments, take a look at the future payments for work completed within the past two weeks.

Next, call or email them asking if they are able to cut you a check. It will surprise you how many clients, especially satisfied ones, will agree to do this. Others may ask for a small discount if they pay earlier (around 2-3%). You’ll have to decide if you are willing to sacrifice the percentage to get the money sooner if/when it happens. In the 10+ years I have been running my video business, I can tell you that only two clients have requested a discount if payment was made early. Other clients either refused my request or paid without asking for a discount.

7. Next, we need to examine what sales proposals exist but have not yet followed up on.

Ask each prospect if you can help them make a decision to proceed with the project. Sometimes, it is as easy as offering additional DVD copies or lowering the price.

Sometimes they’re confused about a particular section of your proposal and don’t want to talk to you. After you resolve their problem, they will be more likely to sign your contract. In some cases, they may even say that they didn’t receive the proposal and are wondering why. Whatever the situation, positive actions in this area can help you move forward in the sales process.

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8. After you’ve exhausted all the above steps and you don’t see any way to get enough cash to pay your next period of payments, it’s time for you to look at your credit lines.

Are you able to get a line of credit for your business? Ask your banker to set one up if you don’t have one. Are you able to access the equity in your home? Talk to a few banks and mortgage companies about a home equity credit line. No matter how you do it, you should only take out the cash you need to make it through the next period. Pay the debt immediately after you receive the checks. This type of debt should be taken seriously. While it may be a lifesaver when you really need it, it can also make you sick if you don’t follow the above steps. Your credit line should not be used as a crutch.

Start thinking about how you can get credit lines if you don’t currently have one. Talk to local business leaders and banks for ideas. A line of credit can make the difference between making videos for another few weeks and closing your doors.