We all need to get paid… but for many small businesses, getting invoices out and money back in, can become an ongoing issue. We have five top tips to get your invoices working hard.
The more you can automate the invoicing process, the easier it will be for you (and your team) and the more transparent it will be for your customers.
Sure, it takes a bit of time upfront to get things set up – whether you use a software program or simply an invoice template. But once you have your templates and related client detail in place, the task of preparing invoices won’t be quite as daunting. Plus, it’s a good opportunity to double check that your invoices include all the necessary detail – total, balance due, dates, the GST component etc – as advised by your accountant.
You might also like to consider mapping out your invoice-month. For example, when do you need to prepare invoices and send them in line with your payment terms, and when do you need to follow-up to avoid the potential for cash flow hiccups?
2. Client clarity
Are your payment terms working for your cash flow needs? Are they clear to your clients? Agreed upfront? Whether you expect payment in 7 days, 14, or on the 20th of the month or other, being clear with your clients upfront and then supporting your payment terms with clear invoicing timeframes makes a considerable difference to cash flow health.
3. Reward and remind
Client relationships count and of course you don’t want your payment terms to be a deterrent to working with you. But there’s nothing wrong with a bit of structure that shows you mean business. Consider things like late payment penalties, or on the flip side, prompt payment discounts. If agreed upfront, these structures can be very effective in driving good payment behaviour with clients.
4. It’s all about timing
Need we say more? Don’t expect to be paid within 14 days of delivery if it takes you 10 days to send out the invoice. The more promptly you get your invoice to the customer, the greater the chance you will be paid on time. Simple, but often a struggle for time poor SMEs.
5. Plan timely reminders
With some structure in place (see point 3) you should be able to reduce the number of late paying clients. But the reality is that it’s unlikely that everyone will be perfect payers every invoice.
Map out reminder dates for late payers and consider how you want to go about following them up. You might be happy to take on the task yourself, or choose a team member, or even outsource it. The key is to have some form of process in place. Every late invoice is a hole in your cash flow.
We’re happy to help if you have any queries. Getting the basics in business right, reaps rewards down the track.