It is surprisingly easy to make it hard for people to pay your small business. Improper invoicing can delay payment, which can grind the entire operation to a halt. At worst, it can even result in you getting far less than you expected, simply because the customer found a hole in the deal. Here are a few ways you can improve your invoicing and keep your company healthy.
1. Keep Payment Terms Short
30-day payment terms aren’t good for your small business. Waiting an entire month for revenue Increases the amount of capital your company requires to function, because you don’t immediately recoup your expenses Fortunately, you don’t need to wait that long. Money transfers and payments are easier than ever before to clear, so setting seven day payment terms is perfectly reasonable. If possible, encourage clients to pay as soon as the transaction is complete, though that may be less viable for service based companies.
2. Figure Out When to Bill Clients
Most small businesses can get away with requiring immediate payment. Should that not be viable for you due to the nature of your offering or the clients, you will have to figure out when exactly you should send the bill. There’s no one set of rules that will apply to all companies, but there are some best practices.
No matter how frequently you send invoices, you should aim to send them on the weekends, when inboxes are less bombarded. If you must send them during the weekday, Tuesdays are your best bet.
3. Explore Automation
Invoking is an important task, but it’s al so time-consuming. Instead of slaving over those invoices, you can instead automate as much as possible. This saves a lot of time that you could be using on other aspects of your business, especially if you have repeat invoicing. Find software that works for you.
4. Set the Terms in Stone
Before Accepting a Task One of the biggest mistakes a small business can make is failing to set terms and conditions before selling a product or accepting a client. Without clear rules, either side has the option to start trying to squeeze more out of the deal, potentially delaying the process or making it a worthless endeavor. Make sure it answers important questions, such as payment options, invoicing, as well as any Incentives available.
5. Never Hold Credit
Once you spend your money, you’re not getting it back until you get paid for your product or service. Holding credit for clients can put you in a bind. It can prevent you from fulfilling other orders, and if the client doesn’t pay you back in a reasonable time, it can affect your relationships. Your manufacturer, for example, may not look fondly on a business that can’t get customers to pay them. Make sure potential clients know this upfront. Your small business will never survive if it can’t get paid on time. Revamp your invoicing and make sure that you get what you deserve.