7 Steps for Invoicing Success
Cash flow is one of the most important elements of a successful small business. When you don’t have enough cash, you can’t run your business smoothly. Cash flow problems can often stem from invoicing mishaps, which are common in any business, but especially small ones. Here are some suggestions on how to invoice successfully and avoid some common mistakes:
1. Be Timely
You can’t expect to get paid on time if you don’t bill on time. Try to invoice within a week of completing your work, while the results are still fresh in the minds of your clients. As time-consuming as this can be, it is necessary to stay on top of billing to ensure you have money coming in as expected. If you don’t have an office manager to help with this, there are online programs that allow you to send professional-looking invoices to clients, schedule recurring invoices and set payment reminders. Also, it’s good practice to invoice at a set time every time, with early morning being most optimal.
2. Set Payment Terms
Even before you send out invoices, be sure you and your clients have agreed on a timeframe for bill payment. The most common terms are 30-60 days, but that can be a long time for a small business to wait. Try negotiating shorter terms. If you get pushback, consider offering a minimal discount as an incentive for early payment, which will help you manage your cash flow.
3. Format Properly
Every invoice should include an invoice number, date of service, due date and accepted payment methods, so there are no misunderstandings. Make sure you send your invoices to the correct people so they don’t get lost, forgotten or thrown away.
4. Clearly Communicate Payment Methods
Whatever method you prefer should be communicated clearly. It’s a good idea to offer multiple forms of payment, such as debit cards, credit cards and echeck (unless you prefer the paper kind). Keep in mind that online payment allows you to track and manage your finances more easily and offering payment flexibility will be appreciated.
5. Follow Up
Bills tend to get paid close to their due dates and are often ignored when first received. Therefore, it’s best to assume your clients will need reminders as invoices are about to come due. They will likely appreciate the notification and will hopefully pay right away once they receive it. Be polite and specific and don’t be afraid to charge interest for late payments.
6. Audit Periodically
Take time to analyze your clients’ payment history and don’t start work for late payers until you get paid. Adopting this policy will ensure you receive the cash you are due.
7. Seek Financing When Needed
Sometimes, despite doing everything right, you still have customers who don’t pay on time. This can be a drain on your cash flow and your sanity. Luckily, ExpoCredit can help. As experts in Accounts Receivable and Supply Chain Financing, ExpoCredit provides cash for slow moving invoices, so you don’t have to wait around to get paid. Visit www.expocredit.com for more information and to fill out an application.
By following these 7 steps for invoicing success, you will do your best to ensure your cash flow is maximized and protected.