How you invoice can make a huge difference to your cash flow. By improving your invoice processes you can ensure that your customers will pay you on time.
Send invoices early
After you have completed a service or sale an invoice should be prepared and issued promptly so that your payment terms will commence at the earliest possible date. Don’t wait until the end of the week or month as delaying means that their payment to you is deferred and could possibly affect your cash flow or worse still be overlooked.
If possible find out the email address of the person responsible and invoice your customer and opt for a read receipt on the email to ensure that they have received the invoice.
State your payment terms
Educate your customer on your payment terms and make sure that they understand and agree to the terms. Ensure that the payment terms are on the invoice as a reminder and stating the exact due date is generally much more effective than just stating the payment terms.
Include payment details and provide payment options
Listed on your invoice should be all the information they need to send their payment along with details of goods provided or services completed, ABN, address and business contacts details.
If you make it easier for the customer to pay online by direct payment into your bank account then it more likely that they will pay the invoice quicker.
Though you will have to pay extra in bank charges consider bank services such as credit card processing and EFTPOS. It may work out cheaper in the long run with not having to chase up payments or save the hassle of having to go to the bank with cash and cheques.
Taking deposits
You can negotiate with your client on long term projects or high value goods for an upfront payment which was assist your cash flow. Not having to rely on your capital to fund a customer’s purchase will ease the financial burden on the business.
Never underestimate the importance of your invoice processing and the effect it can have on your cash flow. Securing sales is important to your business but so is receiving the money for these sales. Spending time on your invoice processes will better your chance of being paid sooner and on time.
Contact Jaleana Gray from Bookkeeping Fairy Perth on 0400 102 358 Check out my website www.bookkeepingfairyperth.com.au