Yes, you who has signed a longer term service agreements, you need to consider how you manage your cash flows before you sign off the agreement.

It should be obvious without saying, but as it happens, it’s not done often enough and not with careful enough consideration. Just to give an example: 

You sign an agreement where you get regular fee every month, however you yourself need to acquire new equipment just for this service. Yes, at the end of the day you will be in black that is you will earn profits, however what you must consider is if you have the money for it. If you do, then there’s no problem. However, if you don’t, you need to reconsider the payment schedule in the agreement.

Another example, if the service isn’t with a regular fee, but you’d rather take one-off payments every now and then, rethink the payments schedule with your own cash outflows – when will you need most cash to provide the service.

Cash flow management is as important in running a business as is getting paid and paying your invoices. It’s as important as paying your taxes, it’s your bread and butter and quite litterally if you think you need to pay salaries aswell.