Creating processes for Invoicing improves Cash Flow
Sunday, November 14, 2010 at 08:34PM This is the second part of my series... Improving Cash Flow
You must establish strong invoicing procedures and be consistent. Invoicing should be done as early as possible. As soon as a job is complete, whether that be daily, weekly or monthly. Don't let how busy you are stop this process. Everyone might like their job, but let's face it, we all work in expectation of getting paid.
If you have recurring billing, memorizing an invoice for repeat use is a real time saver. You can set this to an automatic repeat, and let the software do most of the work for you.
Do you work on larger projects? Don't wait until the end to bill. Set up expectations of paying a deposit in the beginning of the project, an additional payment at a certain milestone and final payment due at time of completion. If you do all the work before billing, you have become your client's banker- spending on services and materials without any reimbursement till the end. This can eat up your own cash flow and leave you short to pay your necessary overhead and payroll.
What you don't bill on time, you don't receive on time. This is not the place to be lackadaisical. Make sure you have terms on the invoice, and inquire immediately when payments do not reach you in the allotted time. I can assure you the company that is checking on their accounts receivable balances gets paid before companies that do not.
Monitoring how you send invoices is another way to make beneficial changes. Still printing and using snail mail? You have just added approximately 7 days onto your collection cycle. Why not change to emailing all invoices directly. You not only save trees and stamp money, but the client receives the bill immediately. Add a e-statement to be sent mid-month and you are on your way to improving cash flow.
Need help? There are plenty of billing software choices, like Bill.com, BillQuick or Freshbooks to help. For a small percentage you are charged, the client can actually pay by credit card or ach right from the receipt of invoice. QuickBooks can also take payments directly, or you can hire an outsourcing company like Quicksilver Business Solutions to help invoice and receive payments.
Next in the series... Collection efforts
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