We know—invoicing can be quite a pain, especially when your clients are late or unwilling to pay their invoices.
One of the most important things for businesses to take care of is to make sure they have positive cash flow on a consistent basis.
This cash flow can help keep them afloat by allowing them to meet their financial obligations, including rent, utilities, salaries, and other crucial aspects of their business.
However, if this cash flow is not flowing in, it can lead to lots of problems, including certain business failure.
In order to get this cash flow, then, small business owners need to make sure their invoicing is top-notch. That way, their clients pay them on time and they can pay others in turn.
That’s why today we’ll look at the 7 ways to make master your invoicing and make sure it is no longer your enemy.
1. Get your policies in order
One of the main reasons that invoices are turned down or delayed by clients is that there is some confusion about the payment processes.
Usually, the business owner neglected to inform the client how payment should be made, where, when, etc.
In order to avoid this confusion, it is important that you create effective payment policies to avert that and have a document you can send to your clients before you even begin working for them.
In your policies, you should answer the following questions:
- Will you require payment before you start the job?
- How long will your client have to submit payment?
- What are the late fees, and when are they applied?
- How should the client pay you—bank transfer, credit/debit, PayPal, etc?
2. Quote it first
Now that you’ve got your payment terms out of the way, you’re not free yet. That document is applicable to all your customers.
However, you still need an effective document for specific clients. That’s why you’ll need to create a quote (quotation/estimate) before you even accept any job.
Your quotation will go over these specific details:
- What your and your client’s expectations are
- How long you’ll have to deliver the goods or provide the services
- What the exact extent and details of your services are
By stating these explicitly, you can help avoid any confusion later on.
3. Automate as much as you can
Invoicing templates are great—they really are. It means you don’t have to start from scratch.
However, there is a better way to do your invoicing. In fact, with online invoicing software, you can do your invoicing anywhere and anytime, as long as you have an internet connection.
That’s because all your and your client’s information is stored online, on the cloud, so you never have to look for your details again.
What this also means is that you can get your invoicing started and finished within 1 minute.
That also means that, with your time and energy saved, you can focus on more pressing parts of your business.
4. Get your invoices out faster
While this is a very common sense tip, it is one that many small businesses fail at.
Even though they’ve finished the job or delivered the goods, they are quite slow to create and send out their invoices.
That means that they will miss the processing cycles in the client’s accounts payable department. And when that’s missed, it leads to delays of at least 30 days until they can get their invoices paid.
Don’t let that happen. You should start creating your invoices even before you’ve delivered the services or goods. When you’ve finally finished, just fill in the specific details.
That way, you can get it out faster and get your invoices paid faster.
5. Be clear and direct
Invoicing can be difficult, that’s true, but it shouldn’t be. In fact, your invoicing should be one of the simplest processes in your business.
You are simply listing the services or products you’ve provided to your client, their prices, and other specific details.
However, many small business owners tend to make it much more difficult than necessary by using unclear language.
When you do that, you are causing yourself a lot of problems. Make sure your details are in plain English.
Furthermore, make sure that you’ve included all the necessary details so that you can get your invoices processed and paid faster.
6. Include late fees
This may not be particularly comfortable for many small business owners, mostly because they have an irrational fear that they might offend their clients.
However, by adding late fees to your invoices, you are simply communicating the fact that you are a professional. You’ve provided the goods and services according to your mutual agreement, and therefore you require payment within the agreed-upon time frame.
If the client does not respect that agreement, there is a consequence: late fees.
This will act as an incentive to make sure your client pays you faster. It is also quite a common practice with larger companies, and therefore there should be no fear of offense to your clients.
7. Remind your clients to pay
Another uncomfortable thing for business owners to do is to remind their clients that they need to pay their invoices.
In fact, this is so awkward that many small business owners just don’t do it. Perhaps that’s the reason that invoices are paid after 72 days on average.
That is a shocking figure, and it should be averted at all costs. Therefore, you need to make sure that you are on top of your late invoices.
On the day that the invoice is due, you should send a polite email reminder to your client. This should be polite and professional, but also concise and direct.
Send a second polite email reminder if the first is unanswered after a week. After that, you should place a polite phone call and talk directly to your client. That way, you can give appropriate professional pressure to have your invoices paid on time.
With these fantastic invoice tips, you’ll see that invoicing actually isn’t your enemy. In fact, it is one of the most important ways that you can get your cash flow positive and improve your business overall.