The way you invoice your clients can make you seem more professional and improve the cash flow of your business. Issuing regular, but smaller, bills forces them to pay more often. There are good tips for managing your cash flow, but it comes down to good habits.
8 tips to improve your cash flow
A business owner who throws invoices together in a hurry once a month is probably not taking as much care as she could be. Having a plan, looking ahead to the future, and setting yourself up for success are as important as actually running your business. Here are some habits that will stand you in good stead for the future, whatever it may bring:
Send the invoice as soon as you’ve delivered the service.
If not sooner! If you can get payment up front, do that. The longer you wait to send an invoice, the longer you’ll wait to get paid. The great thing about issuing the invoice as soon as you’ve completed the work is your customer still has the great job you did fresh in mind.
Take deposits or multiple-stage payments on big jobs.
That way you can pay your suppliers as you go, and if a customer defaults on the payment you haven’t lost the whole sale.
Make it easy for customers to pay.
Make sure your invoice is clear.
Check all the fields of your invoices. A missing field or inconsistent information will give the customer a reason to pay late. This means checking all your invoice templates in the event something changes with your bank details and drawing your customer’s attention to the change.
Have terms and conditions that your customer agrees upon.
Setting out clear expectations from the start can be worth its weight in gold. If your clients know the invoice will be delivered at the completion of work, payable in 30 days, there are no surprises later.
Use an online invoicing system.
A system that integrates all your work, invoices and expenses in the same place can take a lot of headaches out of the process and make it easier to be organised. There are plenty available now such as Freshbooks, QuickBooks or Xero.
Follow up unpaid invoices promptly.
Just a phone call might help remind your client and keep relations friendly. Businesses tend to put this off because they don’t want to ask people for money. But the longer you leave it, the more likely your customer just won’t pay at all. And think about it, as long as you delivered the service and you’re polite, what do you have to worry about?
Start debt collection quickly.
The quicker you do it, the more money you’re likely to recoup. Here are great tips on debt collection. The important thing is to, again, have a process in place and make sure it’s clear both to you and to your customer. If you can’t deal with it yourself, hire someone to do it for you. But make sure you’re aware how much you’re spending on debt collection. If it’s a lot you could be missing one of the good invoicing habits above.
Tool to help improve cash flow habits
Setting up good habits and having the right tools to manage your business are the first steps to improving your cash flow. Reep has fantastic cash flow reporting to help you in your small business. Have a look.