One of the biggest challenges facing a growing business, especially small businesses trying to expand, is maintaining a healthy cash flow. It is very easy for a business to struggle with their bills and expenses, even though they have a lot of receivables in the book. Failure to maintain good and healthy cash flow could lead to other, more severe problems too.
There are many ways to achieve a healthier cash flow. Doing better invoicing and managing customer payments are some of the ways you can ensure a healthier cash flow while trying to grow the business. The tips we are going to cover in this article will help you get started with better invoicing in no time.
1. Select A System
Having an invoicing system that can automate most – if not all – of the process is a must. Gone are the days of manually creating invoices for your customers; manual invoicing isn’t even possible when you have hundreds of customers to deal with.
There are more solutions on the market than ever, so choosing a good invoicing system isn’t difficult at all. You want a system designed for your type of business so that no big adjustments are needed. If you are in the cleaning business, for instance, simply opt for a cleaning payment software with all the features you need.
Speaking of features, there are a few features you want to have from the system. Automation and periodic reminders are crucial. The same can be said for invoice templates and numbering. You want to be able to customize the look of the invoices to better represent your business.
2. Establish Terms & Policies
If you are sending your invoices digitally, accepting digital payments is actually a huge plus. Add a payment button to the invoices you send so that customers can make a payment directly. You also don’t have to worry about manually confirming invoice payments this way.
In the case of manual payments, it is important that you have clear terms and policies. Offer an incentive to customers who settle their invoices early. A late payment fee isn’t always necessary, but you want to be clear about when the payment is due and how missing the payment deadline impacts the customers.
For example, you can terminate any recurring service in the case of a late payment. The system should also send automatic reminders once the payment deadline is reached. You’ll be surprised by how having clear terms and policies helps you invoice your customers better.
3. Add Work Details
Whether you’re billing customers for the services you do or the products you sell, it is always necessary to maintain a detailed work record and to add relevant details – or a summary – to the invoices. Customers can then see right away what they’re paying for and whether you have completed your work.
In the case of a cleaning company, attaching cleaning records or work logs is a great way to add weight and value to the invoice. Customers are more likely to settle their invoices early when they know exactly what they’re paying for.
Another way to utilise work details in invoicing is by creating a summary instead of adding all the details. A work summary is much shorter and allows you to keep the invoice concise. At the same time, the summary still provides enough information about the work you have done and adds weight to the invoice itself.
Through these better invoicing practices, maintaining a healthy cash flow should be easier to do. You will have customers paying their bills on time – or early – and enough cash to keep up with your own business expenses and bills.
Christian Harris is editor and publisher of BCW. Christian has over 20 years’ publishing experience and in that time has contributed to most major IT magazines and Web sites in the UK. He launched BCW in 2009 as he felt there was a need for honest and personal commentary on a wide range of business computing issues. Christian has a BA (Hons) in Publishing from the London College of Communication.