Better Invoices get paid faster!

From the moment an invoice is raised to the time you get paid, an invoice goes through various stages – its life-cycle.
By understanding, monitoring and tweaking your invoice life-cycle you will improve your cashflow, reduce costs and be wasting less time on worrying about debtors!

Streamlining your process from invoice drafting to cash receipt will significantly boost your cash flow.

In purpose-driven organizations, like charities, associations, and other not-for-profit entities, collecting your money on time is critical.

  • Do people who owe you money flaunt your payment timelines?
  • Do people try to negotiate a discount after all the work is done?
  • Have you ever chased a bill that was already paid?

“Yes” to any of these scenarios is evidence your business could do with some Better Invoices!

When your invoicing process is sloppy – your customers will be sloppy paying you!

Want Better Invoices? – take a deep dive into your Invoice Process…

Knowing and managing every stage efficiently can make a huge difference to your bottom line, especially in the case of new start-ups and small businesses where financing costs are high.

By understanding the patterns of your cashflow, revenue and debtors you can make informed decisions about frequency, speed, and patterns of payments.

Setup – Better Invoices

Firstly get the right tools and set-up cashflow support systems…

Active invoice management (i.e. not just sitting around waiting to get paid, and whining) may seem like a big time-consuming task, but so is stressing about cashflow. Stressing isn’t helpful to your business or your clients and customers – Active invoice Management is.

  • Use an accounting package
    The cost of the package will be repaid by the time and effort saved in not having to track and sort out invoices manually – thumbing through your invoice pad/book time and again to work out who has paid, who still owes money and who is a bad payer is very inefficient – enter the invoice in your system and tracking becomes is as simple as looking at a screen.

  • Have very clear terms and conditions AND REPEAT THEM…
    Regularly remind your customers of what you are expecting. Hand your terms to customers when you do the quote, print a copy of your terms on the back of your invoice, re-send terms with your invoice reminders. If you have a clear policy and communicate that you expect everyone to stick to the policy, then follow up; by doing what you said you would do people are less likely to push your cashflow boundaries.

  • Your invoice template must be accurate.
    Invoices must contain all the necessary details such as ABN, contact details, reference to the job, etc – don’t create any excuses for late payment.
  • Set-up multiple payment methods such as EFT, PayPal and other electronic payments.
    Highlight all these opportunities to pay in your terms and on invoices and make it as easy as possible for your clients (and giving them less reasons for excuses).

Follow-up – Better Invoices

Have a strong follow-up process in place – after all this is the money you need to keep services running.

Being punctual about reminders, debtors calls etc; show your customers you are in business and mean business. Unfortunately late payers are common and chasing them is not fun! A system with alerts on overdue payments can offer a tremendous advantage to the business’s cash flow.

Have a strong process in place – after all this is your money and you have already earned it.
examples of this include:

  • FOR REPEAT LATE PAYERS at 2 day before due, issue an SMS reminder: “just a quick prompt to let you know your invoice is due tomorrow”
  • at 1 day overdue, reissue the invoice, with a reminder: “your invoice was due yesterday, here is another copy just in case”
  • 15 days overdue, make a debtors call, and use a script:
    “Hi I’m sure you know our terms require payment within 30 days and you have now had our invoice for 45 days – I’m just calling to reiterate that slow payers make it more expensive for us to run our business and that leads to price rises, I am sure you don’t want to be the cause of our next price rise….so I am hoping you will be able to settle this in full now, over the phone.”

If you don’t like making dreaded phone calls to chase your clients, try SMS and email reminders; they are particularly effective in the early stages. Even if you are a sole trader, have someone else call your debtors in early and the mid-overdue phases, that way you can become the ‘person of last resort’, and your call means ‘we are suspending business with you anymore, as it appears you do not respect us – By the way we are passing your invoice onto the bailiff.’

Conception – Better Invoices

Express Business operations as clearly as possible!

The outcomes here will depend on the flexibility of your software, but wherever possible it is better to also group codes as like with like – it makes the details easier gloss through.

Start with Revenue some headings you may include are:

  • Sales – Do you have a variety of brands, products, or services with each needing to be itemised?
  • Outlets – Do you have a variety of Locations, Stores, and Customers to track, or will just one line be satisfactory?

Then move onto Expenses and consider if you simply want an alphabetical listing or a layout that more directly groups like costs such as Direct Expenses and Operating Expenses

Happy ever after – Better Invoices

Watch the $$$$$$ rolling in!

Once you are paid, check for accurate matching of funds received in your accounting system.
Make sure the amount is applied quickly to the right client.

Properly manage complex invoicing issues like part-payments or one payment covering several invoices.

Nothing makes a client more annoyed, and quickly makes your business operations look bad, than a debtors call for a bill that is already paid.

Once you are confident that the information basis for the report is being entered accurately and in a timely manner, get on with making it somehting that you want to look at – use charts, go with info-graphics, or automate yourself some traffic lights there are many ways to get information to be easily digestible.

Don’t be afraid to enforce your payment terms to your clients – initially this may lead to loosing some bad payers, but the long-term benefits are worth it.

For further info on cashflow improvements see my blog post 25 Easy ways to Improve Cashflow or read this article on Debt Collection Services

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