Important Tips for Small Businesses to Get Paid on Time
A functional and organised invoicing system is fundamental to ensuring you are paid on time for the services you provide.
As a business, it can be difficult to work out why you are having cash flow issues if you do not have an organised payment and invoicing system in place. These tips will help you get paid on time and avoid unnecessary stress and frustration around late payments and help you manage your cash flow more effectively.
Prioritise Invoicing
Applying a consistent invoicing system or schedule is vital to ensure cash comes into your business in a timely manner.
By implementing a predictable invoicing pattern – whether this is fortnightly or monthly, your clients will know the frequency and expectations you’ve set. The sooner you send out invoices, the sooner you can get paid, so it’s a good idea to dedicate a certain amount of time to focus on making sure invoices are sent out at the earliest possible convenience.
After invoicing you need a process in place for following up and receiving funds from overdue invoices. Accounting software like Xero have functionality to automate this, however if you’re not using such technology you need to make following up your overdue’s a priority, in-line with your individual customers trading terms.
Given that invoicing is the facilitator of cash flow it must be a top priority!
Make it Easy to Pay You
You need to make sure you have an agreement in place regarding payments, and how invoices need to be paid.
However, you also need to find out who the invoices need to be sent to, how much detail they require, and whether they require purchase order numbers or invoice numbers to be included on the invoices as well.
Each client will have their own needs and it is important to cater to their needs when invoicing them to ensure there is no confusion or delay when it comes to payment.
Track Payments
Whilst it’s crucial to have an effective invoicing solution, it’s equally important to have a system in place to track which clients have paid and which ones haven’t. Maintaining an up to date record of who owes you money will help avoid any potential embarrassment if you start chasing money from clients that have already paid.
Systemised invoicing is the key to ensuring that you are paid on time and that your cash flow is healthy. Strategic follow up will increase the likelihood that your invoices don’t get forgotten.
Invoicing is the facilitator of cash flow
Invoicing must be a priority for your business: if you invoice quickly and have a good system for of invoicing, it makes the process of debt collecting easier.
Remember: you can’t receive payments from clients until you invoice them!
Ensuring your invoicing process is efficient will maximise cash flow, remove unnecessary stress and reduce frustration. Don’t forget the chance of recovering your debt significantly drops after 12 months, so it’s crucial for all businesses to keep on top of their accounts receivable.