Efficient invoicing is an integral aspect of small business financial management. Although the process may sometimes be tedious, properly handling your accounts receivables ensures healthy cash flow.
Here are some tips on the effective management of your small business invoices.
Have Parameters in Place
Part of the orientation of new clients should include a thorough explanation of your company’s policies for billing and invoicing. Be sure the agreed-upon guidelines cover the expectations of customers such as invoice format, preferred dates of delivery, and the person or agency to whom the invoices should be sent. These specifications should also include methods of payment, possible discounts for prompt payment, and late payment penalties.
Prepare Detailed Invoices
Be as thorough as possible in the details you specify in your small business invoices, and you’re bound to get paid faster. Include the products delivered or services completed, the company logo and contact information, the invoice amount, and how payment is to be made. Don’t neglect to delineate the payment deadline and late fees.
Take the monotony out of invoicing by automating your system. Use accounting software to send invoices, track the payment process, and receive payments. This ensures that you’ll always get invoices and reminders out on time.
Follow a Collection Procedure
Have a collection procedure in place for clients who are late paying their bills. Follow up customers that have not responded to the initial invoice you sent with a copy of the original and a polite reminder. If after a few days you still receive no response, phone the client or send an email. Follow this communication with further reminders if necessary until the bill is paid.
If you come to the realization that you’re spending more time on collecting from late-paying clients than on growing your business, considering factoring your accounts receivables as a means of stabilizing your cash flow. Through invoice factoring, you receive advances on your unpaid invoices so you can move on and focus on sales and company growth.
For more advice on managing your small business invoices, look to Integrity Financial Capital.