When you’re a solo buyer’s agent, especially in the first few years, managing cash flow can be a constant treadmill. It’s a balancing act of having to allocate cash where it’s most effective in your business, managing living expenses and setting some cash aside for lean times. And those lean times do come.
In this article, I offer some steps for managing your cash flow so you don’t have more month than money.
What is cash flow and how do you measure it?
Your cash flow is what you receive in fees less what you need to pay in tax, GST, vehicle, home office costs and so on. If you have more money coming in than you need to spend, you are ‘cash flow positive’.
8 key steps for managing your cash flow
- Keep your bookkeeping up to date
If you haven’t invested in an online bookkeeping system for sole traders, then do it now. It’s time to ditch that spreadsheet! There are many systems to choose from. Some like MYOB and Xero ask for a monthly subscription fee. Other simpler systems are free to use or you pay a small annual fee. Free options include Zoho and ZipBooks. I’m not going to recommend one over another; do your own research, take a few for a test drive and see which one suits you best.
- Understand where your money is coming from and when
This comes back to your bookkeeping and the reports you can generate. You should be able, at the click of your mouse, to understand how much money you’re owned and when it’s due.
- Make it easy for clients to pay you
You might find it more beneficial to ask for progress payments than one lump sum upfront. Offer clients the ability to pay you by credit card or part payments so they can earn points at the same time. This can sweeten the deal for them and ensure you are paid quickly.
- Invoice immediately and follow up late payments quickly
Most solo buyers’ agents won’t begin a property search until we’ve been paid an engagement fee, but we still need to get the ball rolling.
- Separate your GST payments and other regular outgoings
You can set up a direct debit or give yourself calendar reminders to transfer the amount you’ll need to pay in the future into a separate account.
- Pay your own bills when they arrive
Putting off paying your own bills won’t make them go away. Worse, not paying them quickly will give you a false idea of your true cash position. Pay accounts every fortnight.
- Build a cash reserve
You’re doing everything right and making more money than you spend. So you can go out and buy a luxury item to treat yourself, right?
Wrong. While times are good, we need to be like the ant, not the grasshopper, storing some supplies for slow periods when we have fewer clients. We also need to save to invest in our businesses for a website, marketing, advertising, accountant or financial adviser fees and more.
- Organise an overdraft
For those of you who can’t deal with the stress of uncertain income, you can organise an overdraft from your bank or building society. There are some products where interest is triggered only if you draw down the available cash. You might never need it but it will give you peace of mind.
Join us at Property Mavens Group
Become a Property Mavens ‘Agency Owner’. Currently we are in a growth phase and we’ve got more buyers and vendors wanting help and leads than our team can handle. We’re recruiting property professionals and buyers’ agents to join us.
Now’s the perfect time to make your move but we have limited places available in this strong buyers’ agent business, with leads in Melbourne, Geelong, Bendigo and Ballarat.
Want to know more ? Call Miriam Sandkuhler, on 03 9988 2266.