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If you want to improve the cash flow into your commercial cleaning business, there are many things you can do. But first, you need to understand just what cash flow is and if it's a problem for your business.

Does your commercial cleaning company have a cash flow problem?

Some cleaning business owners believe that the total amount invoiced each month is the same amount of cash that is flowing into their business. For example, "I invoice my clients $30,000 a month, so I have $30,000 coming into the business each month". But if your clients don't pay their invoices on time, your cash flow suffers. And if you don't stay on top of what's happening, it could mean digging into your cash reserves to pay the bills. It may also mean that you have to spend time as a bill collector making phone calls or perhaps even sending out statements and collection notices to remind customers of past due bills.

In addition, many commercial cleaning businesses charge on a monthly, after the fact, basis. But that means you are having to pay your employees before your clients ever pay their invoice for those cleaning services! That is another situation that can adversely affect your cash flow.

Tips for improving cash flow

Start by always having a signed contract or proposal that outlines payment terms. Although this seems obvious it is important to discuss payment terms in the contract, with approval by both parties. Make sure that your contract or proposal includes not only when payment is due, but what the penalties are for late payment.
Include all relevant information on your invoices. Invoices should include more than just the cleaning client's name and services provided. Include when payment is due, late payment penalties and a contact name and phone number for any questions about the invoice. If it needs to go to a specific person for payment, be sure to address it properly. I've seen invoices sit in someone's inbox without any action being taken to get it paid because they weren't the responsible party.
Do you provide cleaning services to government entities or large corporations? Government offices and large corporations generally have cut off dates for each billing payment cycle. You may have to get your bill in before a certain date or they won't pay it until the next payment cycle. For example, you may send your invoices out on the 25th of the month, but your client may make their payments by the 20th of the month. In this case, if you just bump up the billing date for that client, you may get payment a few weeks earlier. Ask the billing agent or accounts payable department when they need your invoice so you receive payment on time.
Send out your billings promptly. You may do everything for your cleaning business from marketing to meeting with prospective clients to cleaning buildings. It is easy to put some things off, but don't let your billings be one of them. Make sure to send out your bills at the same time each month, or if your contract indicates that you bill right after a service is completed, then send out the invoice immediately.
Many cleaning companies require bills to be paid within 30 days (net 30). Perhaps you could offer discounts if the customer pays their invoice early. Consider offering a 2% discount if they pay the invoice within 5 or 10 days. Many of your clients will take advantage of the discount.
To keep cash coming in sooner, consider shortening your billing cycles. Instead of having payment due in 30 days, require payment upon receipt or in 15 days (net 15). To avoid any confusion state the specific due date on your invoices.
Ask for payment before the service is to be provided. This method of invoicing has become standard in the cleaning industry. Send your invoice a week to 10 days before the next month's service is to begin. For example, send out your invoice for April cleaning services by March 25th.
Give your clients an alternative of paying by credit card. If you don't accept credit cards, I highly recommend considering it, as more and more companies are interested in paying this way. You may also consider setting up an account through PayPal or similar payment system. These companies allow you to invoice your clients through e-mail and then they can use their credit card to pay for cleaning services.
Check with your clients regularly to make sure they are satisfied with the cleaning services your company is providing. Clients have been known to hold payment if they are not happy with their service even though they have not told you there is a problem!

Remember, your clients are in business to make a profit and so are you. Getting paid is how you pay your employees, grow your business and pay your bills. Make sure that your payment policies are stated ahead of time, communicate with your clients and provide a good service. Keeping a good incoming cash flow is vital to the stability and growth of your business. Don't be afraid to let your customers know that you expect prompt payment for a job well done!

Jean Hanson helps owners of commercial cleaning companies build a more profitable and successful cleaning business through her online community at TheJanitorialStore.com. Jean is also the host of the popular Web TV show CleaningBiz.tv and author of the newsletter Trash Talk - sign up today!

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