Creative and business resources for photographers – ProPhotoNut

Cash flow – 7 steps to check

September 6th, 2008

Managing Cash Flow is the single biggest make or break factor in small business success. Make sure you are in check with my 7 step guide to ensure you survive.

You may be turning a good profit on your products and have a great customer base but unless you get enough money in quickly enough to cover all the money going out of your business to pay for materials, stock, staff and all the other costs, you’ll sink not swim.

If you sell prints online and take money through a company like WorldPay for instance it can be a whole month before you get access to the funds in your account. Similarly if you shoot commercial images and use an invoice and statement system it can be months before you get paid too.

Cash flow management is crucial for all small businesses but especially the photographic retailer. Given the ease with which the consumer can stop or reduce spending on portraits and the current pressures on inflation and house prices, High street portrait photographers are arguably more vulnerable than some of the other photographic sectors. If any cracks do eventually appear, the pain will be felt remarkably quickly.

Here are 7 steps to keep your cash flow in check.

1. Operate a cash flow forecast system. All photographers can benefit from simple to use accounting packages like Quickbooks. These will automatically pull together the information you need, using data you’ve already entered to generate invoices or make payments to suppliers, giving you immediate access to an up-to-date cash flow forecast. You’re much more likely get round to sending invoices out promptly if creating them is an easy process, rather than a laborious handwriting job.

2. Invoice quickly. Give your clients time to arrange for funds to be transferred into your account by the due date. We take all payments for frames and albums at the order stage and not the delivery stage.

3. Encourage early payment. Do everything you can to get money in. Operate an early settlement discount scheme to reward those customers who pay you ahead of the due date.

4. Increase your deposits taken. By doubling the deposit or fee paid at the time of booking a wedding to lets say £500 from £250, a photographer who has 20 weddings in the diary can have an extra £5,000 in the bank.

5. Don’t hold stock. Order albums and products once you have received payment from the client. Use viewing systems rather than proof books for your clients. Proof books are an avoidable cost.

6. Increase invoice frequency. This one is for commercial and architectural photographers. If you are working on a long term project lasting several months for a big company, arrange to have staged payments. This is quite a reasonable request and has the added advantage of leaving you less exposed to clients going into administration or going bust.

7. Reduce your fixed costs. It sounds obvious but things like business bank charges can be avoided all together by switching banks and phone bills can be slashed by using Skype. A great resource for money saving is the www.moneysavingexpert.com website. A note of interest; this site has seen massive growth by the use of free viral marketing. Can you utilise viral marketing? Google ‘viral marketing’ to find out what the buzz is about.