One of the most frequently used clichés in the world of business is ‘Cash flow is king’. Like most clichés – it is absolutely true. On paper, you could have more clients and sales than you ever dreamed of having, but unless the money finds its way to your bank account, none of them mean anything. Keeping a business going takes a lot of resources – inventory, office space, manpower, electricity and several other things. All of them need money to accomplish.
So, you might be sending invoices to your customers on time, but have you thought about how to ensure that the invoices you send actually get you paid? Let’s see how you can go about creating better invoices.
1. Be clear in your communication.
If you’re billing a client, you have to make sure you provide them with as much information as possible about what they are paying for. This means including details about the product or service delivered and a reference to the agreement that the client agreed to.
A lot of people mistakenly assume that the only language they should use on an invoice is complicated legalese. Sure, you don’t want to put memes on your invoices, but you don’t need to break out the dictionary either. As long as you are completely clear in your invoices, there is no need to include jargon. Think about the expectations of the client you are dealing with and adapt your invoice to suit their style of communication.
2. Set up a process and stick to it.
Here’s something to keep in mind when you’re dealing with clients – if you allow them to make late payments, they will usually pay you late. Even if you have a due date on your original contract, sometimes your clients will miss it due to reasons intentional or otherwise.
To avoid this problem, keep your billing cycles short and always follow up with your clients. Send them notifications well in advance of the due date, and then keep reminding them in the period leading up to the day of payment. Make sure you let your clients know what the deadline for payment is. If they miss the payment date for any reason, let them know that they have to contact you within 2-3 days or you will pursue further action. You may want to consider factoring your invoices for access to immediate capital as well as streamlining your accounts receivable functions.
Whether your business is thriving and you can’t keep up, or you are waiting on clients to pay their invoices, Universal Funding can help your growing company. Call us at 800.405.6035 or complete our rate form today to learn more about invoice factoring and how it can improve your company’s cash flow.
3. Anticipate problems and deal with them in your invoice.
Once you’ve let your client know that you have a strict payment schedule that they should adhere to, you need to figure out how to handle any excuses they might have to offer.
One of the most common problems faced by service providers is that clients will complain about the service provided after it has been delivered. This might be a genuine disagreement with the service provided, or it might be an attempt to save some money. Don’t assume that clients won’t have any problems with your invoice because they agreed to receive the exact service they have been billed for.
When such disputes occur, don’t shy away. Expect these negotiations to happen and plan for them beforehand. Mention clearly in your invoice that if the client has a problem with the service provided, they should contact you within three business days. Listen to your clients. If they have a genuine case, make accommodations for them. Losing a client forever is far costlier than offering them a 10 percent discount this one time.
Invoicing is an extremely important part of any business. If you follow all of the steps mentioned above, you will have rock-solid invoices that you and your clients will be happy with.
About Universal Funding
Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days.