give-money In Step 1 of our series on how to improve your business cashflow we take a look at issuing invoices propmptly and correctly.

The sooner you issue your invoices, the sooner you can expect payment.

This sounds really obvious, but you may be surprised to learn how many people leave it until the end of the month, or later to raise their invoices. The longer you leave it, the less fresh it is in your mind, and the more likely you are to forget what you did for the client or forget invoice at all – it happens. Strike while the iron is hot. Your customer is more likely to pay you on time if they receive your invoice as they are still

  • Email and/or post – send your invoice in which ever medium is most appropriate for your client. Most people nowadays are pretty tech savvy and will prefer email. However, some people are still die-hard technophobes! In our own clients ‘client’ portfolio, we do sometimes come across a customer who prefers paper and can or will only pay on receipt of a paper invoice. If you have a customer who still relies on paper, then the fastest way to get paid is to send a paper invoice. If you want your posted paper invoice to stand out on the mat against the rest of the days post – perhaps you could send your invoices out in a brightly coloured envelope or one with your logo on.
  • As quick as you can billing – most modern accounting systems such as Xero, Kashflow, QuickBooks etc – will allow you to email directly to your customer from smartphones and tablets. If your business involves site visits to a client – you could spend a few moments at the end of the call completing your notes and sending an invoice from your phone or tablet. Make that part of your customer close or wrap up process so you don’t have to go back to it later.
  • Address invoices correctly. A common error is to send invoices to a registered office or a PO Box, when the company trades from or processes its invoices from a different address. Take a few moments when you start working with a new client to understand their invoice processing and payment processes. If you have a new client form that you ask your clients to fill in, then you could include a section for your customers billing details.

New Customer Details Form Snapshot

  • Send copy to Accounts Payable if the company has a dedicated Accounts Payable team. Quite often the person who places an order is not the same person or persons who will process and pay the invoices. A common issue with bigger clients is that you are chasing Bob the buyer who has not forwarded your invoice to Wendy in the accounts team for payment. So while you are happily or perhaps, unhappily chasing Bob and he is ignoring your emails – it’s not his job to pay the invoice and your chasers get lost in the minutia of his inbox. Wendy has no idea you are chasing and doesn’t have you on her payment run yet – so she may be paying your clients other customers, but she is not paying you!
  • Make sure it’s clear what you are billing for. We often see invoices referring to sale of ‘goods’ or ‘services’ and by the time the invoice is received – the client has forgotten what they bought from you. If your invoice goes to a Finance or Accounts Payable team, they will have even less idea what the company has bought. So not only do they have to trace the person who ordered the goods and services from you, but they probably can’t even enter your invoice on their system as they don’t know what has been bought and where to code it. Add a clear description of the goods or services, and the person placing the order (if that’s not the person you are sending the invoice to) and make the invoice approval process as easy as possible for your client.
  • Include an order reference, if appropriate and necessary. Some companies will only pay invoices that quote a formal purchase order and have been pre-approved. If this is a requirement of your customer, then you could make it a condition of placing the order before you deliver your goods or services. We don’t see it often, but occasionally an overzealous employee may order goods or services from you without jumping through the proper order approval process in their own company. You, in all good faith would deliver those goods or services and then find yourself in a pickle when it comes to chasing payment.
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