Invoicing Methods: How They Affect Your Cash Flow
Invoicing provides the lifeline for the cash flow of most small businesses, and effective invoicing methods are essential for small business success. However, many companies do not monitor the intricacies of invoicing carefully enough, and as a result, their funding suffers and they do not grow as they should. Here are some important considerations you should keep in mind.
Pay Attention to Details
Effective invoicing methods begin before you even send them out. Keep meticulous records of products sold, hours worked, and expenses incurred so that your invoices are completely accurate. Proofread all your invoices before you send them to avoid client questions and subsequent delays in payment.
Send Invoices Promptly
Send invoices as soon as products are dispatched or services are completed. The longer you delay, the more likely it is that clients neglect to pay on time as other urgent matters consume their attention. Instead, bring up the issue of payment while the delivery or service is fresh in their minds. Under some circumstances, you may be able to send the invoice while the work is still in progress.
Encourage On-Time Payments
Consider incentivizing early payment by offering a discount, as the idea of a cash reward may motivate your clients. Additionally, make it easy for them by providing alternatives in payment methods. Some customers may be used to the traditional method of paying by check. Others appreciate the ability to pay online, so be sure you have a digital payment option. Your contracts should also specify a penalty for late payments.
If clients are late honoring their invoices, don’t let more than a few days pass before you email or phone them with a reminder. This is not pushiness, but merely professionalism. When you do contact them, be sure to fix a new deadline for the payment.
For more advice on invoicing methods and other facets of small business finance, get in touch with Wexum today at 512-646-0902.