Latest / Cash Flow Conversations with Fexingo: Working Capital, Receivables, and Small Business Finance / How a Window Cleaner Started Billing Weekly to Fix Cash Flow
Transcript
- Lucas: So I was talking to a window cleaner last month — three vans, a crew of five, and he was doing about seven hundred thousand a year in revenue. Solid margins, too. But he told me he was constantly juggling payments, sometimes dipping into his personal account to make payroll. Luna: That's the classic profitable but broke situation. What was the culprit? Lucas: The invoicing. He was billing customers monthly, and his terms were net thirty. But in practice, the average customer paid around day forty-five. So his days sales outstanding — the average time it took to collect — was forty-five days, even though the work was done in a week. Luna: And that gap between doing the work and getting paid is what eats your cash. Forty-five days is brutal when you've got weekly payroll. Lucas: Exactly. So we ran the numbers. He had about a hundred and twenty thousand in annual overhead, with payroll being the biggest chunk. With that forty-five-day collection period, he was effectively financing his customers for a month and a half. Lucas: The fix we landed on was surprisingly simple: switch from monthly billing to weekly billing, and offer a small early-payment discount. Two percent off if they paid within ten days. Luna: Two percent — that's not nothing. How did his customers react? Lucas: That's the thing — most of his clients were residential, and they didn't even notice the change. They just saw a smaller invoice, more often. A few commercial accounts pushed back, but he framed it as a way to keep prices stable. And the discount gave them a reason to pay faster. Luna: So what happened to the days sales outstanding? Lucas: Within one quarter, it dropped from forty-five days to nineteen. That freed up about twenty-eight thousand dollars in cash that had been sitting in unpaid invoices. He used that to hire a second crew and take on more commercial work. Luna: Twenty-eight thousand — that's a game-changer for a business that size. And you didn't have to cut costs or raise prices. Lucas: Right. The only real change was the billing cadence and the discount. But the math behind it is worth unpacking. The cost of that two percent discount was about two thousand four hundred dollars a year, based on his revenue. But the benefit — twenty-eight thousand in working capital — was more than ten times that. Lucas: And the working capital isn't just a one-time bump. It's recurring. Every week, invoices are getting paid faster, so his cash conversion cycle — that's the time from paying for supplies to collecting on the job — shrank from about fifty-five days to under thirty. Luna: I think a lot of small business owners don't realize how much waiting for payment actually costs. It's not just the delayed cash — it's the opportunities you miss because you don't have the cash to act. Lucas: Exactly. He told me he'd passed on a couple of commercial contracts before because he couldn't afford the upfront labor. After the change, he could. And that's the real return. Luna: Why do you think so many businesses stick with monthly billing? It seems like the default, even when it doesn't make sense for their cash flow. Lucas: Part of it is inertia — that's how they've always done it. Part of it is the fear of annoying customers. But the truth is, most customers don't care. They're already used to paying for subscriptions weekly or monthly, and a smaller invoice is easier to swallow. Luna: And the early payment discount — that's a proven tactic. But it has to be sized right. Two percent for ten days is pretty standard. Lucas: Yeah, you can even think of it as an investment. The two percent you give up is essentially the cost of getting your cash faster. If you compare that to what you'd pay for a line of credit or factoring, it's often cheaper. And it's more reliable because it's tied to your actual receivables. Lucas: But there's another angle here that I think is often overlooked: the psychological effect on the business owner. When you're waiting forty-five days for payment, you're constantly in survival mode. You make decisions based on fear — like delaying maintenance or skipping marketing. When cash flow smooths out, you can actually think strategically. Luna: That's a great point. It's not just about the numbers; it's about the mental bandwidth. And that can lead to better decisions overall. Lucas: So if you're a small business owner listening and your receivables are stretching out, take a look at your billing frequency. Are you waiting thirty or sixty days to send an invoice? Could you bill weekly or even per job? And could you offer a small discount for fast payment? It might feel like a big change, but the math can work in your favor surprisingly quickly. Luna: And it's not just for service businesses. I've seen retailers do this with wholesale accounts — billing more frequently to keep cash flowing. Lucas: Absolutely. The principle applies anywhere you have a lag between work and payment. A weekly billing cycle might not work for every industry, but even moving from net sixty to net thirty can make a huge difference. Lucas: Before we wrap up, I want to mention something that's on my mind because of this conversation. These shows — they're free, and they're ad-free, and that's only possible because of listeners who chip in a little something. If you've gotten some practical value from Cash Flow Conversations, a couple of dollars a month makes a real difference. You can support the show at buy me a coffee dot com slash fexingo. Luna: Yeah, it genuinely helps keep the lights on and the episodes coming. Every little bit counts. Lucas: So back to the window cleaner — he's now got two crews, and he's looking at breaking a million in revenue this year. And the kicker is, he told me he hasn't lost a single customer because of the billing change. In fact, some of them said they actually prefer the smaller, more frequent invoices because it's easier to budget. Luna: That's a nice side effect. And it reinforces the idea that customers often appreciate clarity and consistency over a big lump sum. Lucas: For sure. The lesson here isn't just about invoicing — it's about questioning your defaults. What's standard in your industry might not be optimal for your cash flow. Sometimes a small tweak can unlock more cash than a big cost-cutting initiative. Lucas: So if you're running a business, take a hard look at your receivables. How long are you waiting for payments? Is there room to tighten that? Could a discount pay for itself? The answer might surprise you. Luna: And if you've already made a change like this, we'd love to hear about it. Maybe it'll inspire another episode. Lucas: We'll be back next week with another story of a small business cracking the cash flow code.