Often, you need that money in order to purchase supplies that will help you produce more goods and services to sell or supply.
So what can you do to improve your cash flow when you are so reliant on your customers? Well one thing you should look to do is to make it easier for them to pay you.
Same day invoicing
If you can invoice your customers when the work is done, not a week or two later, then chances are you will get paid quicker as well. Consider leaving your invoice with your customer when you complete the job and deliver the goods. If this is not possible, ensure you send the invoice as soon as possible after the event – invoice much later and you run the risk of your customer putting off the payment as you have demonstrated that it doesn't have urgency.
Email your invoice
If you are not able to leave the invoice when you deliver your goods or services, email the invoice, don't rely on the post. By emailing you are showing your customers that you are on top of things and removes the possibility of invoices 'getting lost in the mail'. An email is traceable and can be used as a communication trail if necessary.
Set reasonable due dates
If everyone else in your line of work offers 14 day terms, don't offer 60 days. If customers are used to paying other suppliers quickly then they will pay you quickly too – unless you let them delay, and then they may take even longer as you haven't shown them that there is urgency. If payment is not made by the due date, make sure you send a follow up invoice.
Pay now functionality
Rather than emailing a word document or pdf of an invoice, sending an electronic invoice with a 'pay now' feature is a far more effective method of invoicing. If the body of your email is the actual invoice it is clear to your customer the cost and terms, and if you then insert a link that will enable them to make payment instantly, you have not only made it easy for your customer but increased your chances of being paid quickly.
There are several invoicing management tools available on the market these days and many of them offer software that will help you easily manage your finances and streamline your invoices. Stone Accountants & Advisors use Xero as it provides all of the features we have listed above, but there are many others that provide similar features. If you would like to discuss any of these options, or even just chat about how your business could do better, give us a call on (03)9870 7247 or drop us a line at firstname.lastname@example.org, we're here to help.