We don’t need a fortune cookie to know that cashflow is the lifeline of every business, so we can all do with a few tips to get paid faster.
Cashflow plays such a critical part in the success or failure of small businesses that it sometimes boggles my mind to see customers chasing new clients to make up for cash shortfalls instead of following up on the payment of already issued invoices. The reality is that positive cashflow doesn’t simply start and end with sending your client an invoice – more often than not, the hard work only comes thereafter.
More often than not we encounter the following excuses from small business owners when they face up to their cashflow difficulties:
- What if you annoy them by asking for payment and they don’t want to work with you again?
- What if you offend them, and they were about to pay you anyway?
- They’ll pay you in their own good time, following it up makes it look like you don’t trust them.
- You don’t want to come across as ‘pushy’ and you want to keep a good relationship with them.
- The thought of asking for payment seems a bit ‘urghh’ and actually you’d rather even make those sales calls you hate instead!
Hard truth time – if you have outstanding monies due to you, you could be storing up a serious cashflow problem. In fact, this may be having a negative impact on your business right now.
Over 1,500 members of an online business community recently shared their experiences about invoicing and payments with Xero. We’ve taken the best of their helpful advice and feedback, and summarized it here:
Top seven tips to get paid faster
Getting paid and having a healthy cashflow is the lifeblood of every small business, but it’s not always as easy as sending an invoice at the end of the month. You’ll be laughing straight to the bank with these top invoicing tips.
Discuss payment terms before you get started
Getting this sorted upfront means that there is no confusion down the track. It also sets the clients expectations around payment before you start the work.
Keep detailed records of inventory and time
This saves time when it comes to creating the invoice and makes sure you don’t miss anything. It also means if things are going over budget you can let your client know, instead of sending them an expensive surprise at the end of the month.
Make the invoice clear and easy to understand
List the details of the job in a way that makes sense to the client, any confusion could create a payment lag. It’s also good to personalize your invoice with your business logo – it helps carry on the professionalism of your work.
Set appropriate payment terms
If you need to receive payment within 30 days, our data reveals that you will need to set your payment term 13 days or less. Keep in mind that on average, debtors pay invoices two weeks after the due date.
Address the invoice to the person paying
Make sure your invoice goes straight to the person who makes payment to avoid getting lost in someone else’s inbox. If you’re unsure exactly who that is, give them a call – it pays to know the person paying the bills.
Invoice as soon as possible
Send your invoice as soon as possible, the sooner a client receives an invoice the sooner they will make payment. It also means they will receive it when the value of your work is still fresh in their mind. Accounting software that lets you create professional recurring invoices will streamline the invoicing process.
Keep on track with debtors
The squeaky wheel gets the oil. When things become overdue, send reminders, monthly statements or make a phone call. It will help remind your client that you are serious about getting the invoice paid. Some accounting software sends you an update when the invoice has been opened.
Did you know that with cloud accounting it is possible to automate your invoice follow-up procedures?
If you’re tired of the emotional drain this has on your business, sign up for your free 30 day trail today!
For the rest of you that want to continue hacking away at getting the money in the bank, the following Infographic courtesy of our friends over at Debtor Daddy might be helpful…
Image courtesy – Debtor Daddy