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Seasonal Cash Flow Issues #4 That Membership-Based Businesses Experience (and What To Do About It)
Post Series: Seasonal Cash Flow Issues

In previous weeks, we outlined the first three out of five seasonal cash flow issues that membership-based businesses experience, including:

Cash Flow Issue #1: Failing to Forecast and Running Out of Money

Cash Flow Issue #2: Being Overly Optimistic About Your Projections and Pricing

Cash Flow Issue #3: Not Competitively Capturing Seasonal Market Share

This week, we’re revealing #4 out of 5 of the most common, seasonal cash flow issues that can determine whether or not your members will default on payments, leading you to turn to lenders for small business financing.

Cash Flow Issue #4: Lackadaisical Accounts Receivable

Once you have a new member, you want to make sure they know how much they’ll be charged and how often, along with all other membership requirements and stipulations. Once this is established, it’s your job to follow through on consistently collecting.

Ideally, your pricing model collects each monthly membership payment in advance, but how are you collecting payments? If you’re leaving it up to members to remember to pay you on time or in-person, you’re very likely creating unnecessary administrative work for yourself while leaving money on the table. 

What To Do About It:

Offer direct debit:

Many membership-based businesses can benefit from setting up direct debit (and including this in their contracts) which automatically takes a set payment amount from each member’s debit account on a specific day each month. 

This saves your small, membership-based business both time and money on the labour that would otherwise be involved in individually tracking, invoicing and collecting payment from members–especially as your business grows. It also makes members more apt to continue paying for the service, removing the barrier of having to send a cheque or pay you in person. 

Remove payment barriers:

Along the lines of offering direct debit, make it as-easy-as-possible for new members to pay you for the other things you offer by accepting debit, credit card, e-Transfer and PayPal payments, both online and on-location. 

Automate:

Many of the most popular, cloud-based, invoicing and accounting software applications offer features or integrations that let you automatically track overdue payments from members, and even send them late payment reminders at preset intervals. Harvest is one example, and platforms such as Quickbooks offer a variety of integrations that include easy invoicing features and payment reminders. 

Don’t let late payments age past 30 days before collecting:

If a payment is late, either contact the member and politely make them aware within a week, or set up your billing software to send them reminders automatically. The longer an overdue payment ages, the less likely you are to receive payment. 

Ready For the Next Step?

Visit our blog next week for Cash Flow Issue #5: Not Saving Enough Net Working Capital to Execute on Ideas and Plans.

Need Cash Flow Help Now? 

Is your business feeling stuck in a situation that only an immediate influx of money can resolve? 

The problem with bank loans and lines of credit:

Applying for a business loan from the bank can take weeks, and many small business requests aren’t ever approved. Banks are typically only interested in substantial and long-term loan requests by business owners who have sufficient liquidable assets for securing the debt.

Considering that many small business owners are busy wearing several hats in their business, they don’t have the time to go through meetings with banks and potential lenders. When a financial emergency arises, time is of the essence and they need help, fast! 

And considering that many small business owners, already invested their own personal assets and savings in launching their business, they need a lender that considers their situation and offers loan amounts and repayment terms that are tailored to their unique requirements. 

Company Capital Can Help

While your business may be counting on increased sales this quarter, keep in mind that the holiday rush is also a time when businesses experience cash flow issues due to poor prior forecasting or lack of operating capital. Small business owners come to us for this very reason, seeking immediate financial support through one of our short term business loans. 

100% Canadian owned, Company Capital offers small business loan options that are based on your business’s historical sales performance. 

At Company Capital, you can speak with real humans at our office who will listen to your situation, and guide you through a fast and simple application process. 

Borrowing from Company Capital is a heck of a lot faster and more convenient than the process involved when borrowing from banks

It takes as little as 3 minutes to apply for a loan from us online, via phone or email. Over 90% of applicants are approved for our Term Loans, receiving funds within 1-2 days. 

Actual Clients, Actual Results

Take a look at what other local small business owners have to say about us and how we’ve helped them.

Choose The Right Business Loan For Your Situation

Find out which loan option is right for you, take a look at how easy it is to apply, or give us a call at 1 (877) 595 2346 to learn more. We’re proud to support small local businesses and serve as trusted advisors in helping you grow your business.

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