Cash flow is the lifeblood of a small business. Your business will not survive long if you don’t ensure you have a steady, positive cash flow into it. How can you ensure that your invoices are paid and with as little delay as possible? Here are eight pitfalls to look out for.
Forgetting to invoice
You should invoice your client the moment you have completed the job. By sending the invoice quickly to your client they will still be able to remember your great service and be more keen to pay your invoice speedily. With the advent of cloud-based technologies you could even send an invoice directly from your smartphone.
Proofreading your invoice
Your invoice is a representation of your company. How it is presented to your clients says a lot about your company. It is imperative for it to be accurate and easy to read. Ensure that you use the correct currency on your invoice. In addition, you need to check the billing address for the company is correct.
Following up on overdue invoices
It is important to have a system in place where you can follow-up on overdue invoices. Your clients may not have received your invoice or they may have forgotten about the invoice. It is therefore your duty to ensure that you follow-up on your invoices.
Give a clear due date
Ensure that the due date on your invoice is clear. Often you will see “payment due in 30 days”. This statement does not have a clear deadline and will often be forgotten by your customer. It is better to write down the exact calendar date that you expect to receive payment on.
Itemise what you are billing for
It is important to write clear and concise items for each product or service you are billing your customer for. If you have unclear items on your invoice, it may cause a delay on payment with you going back forth with the customer to make sure the invoice is correct and you did do the job you are billing for. Another matter to consider if you are charging your client for your time is that you advise them when you might be taking longer on project then you had first anticipated. This will ensure they don’t get a shock when they receive your bill for services rendered.
Sending the invoice to the wrong person
Find out at the start of the project who you should send the invoice to. Make sure you have the correct contact number and email address for the person who is responsible for paying the invoice. This will ensure that you get paid timeously.
Not having clear terms of payment
It is important to clearly stipulate on your invoice what will happen should payment not be received. You could also give your clients an incentive to pay you earlier by offering a small discount if they pay before the due date.
Having poor manners
Another matter to consider is being polite on your invoice. By using phrases like “thank you for your business” and “please pay your invoice by the…” you will encourage your clients to pay you. It has been said that you can increase the percentage of invoices paid by 5% by using these polite phrases.
By avoiding these eight pitfalls you should be on your way to improving your cash flow and invoicing system.
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