|Understanding whether your cashflow is positive or negative is key to understanding how your business is performing.
If you find yourself with bills to pay and no idea when your customers will pay your outstanding invoices it quickly becomes very difficult to keep track of cashflow – something many businesses are keen to improve on quickly, particularly in the current economic climate.
A question we are often asked is how can I get paid faster by my customers? And the answer is simple – review your invoicing process!
We’ve put together our top 5 customer invoicing tips to ensure you get paid on time, every time.
Tip 1 – Review your invoice template
For an invoice to be effective, it needs to be based on a strong template including the essential standard information. That makes it quick for you to prepare and provides your customers with consistency.
As standard your invoice should always include your details, a description of the goods or services supplied so it’s clear what your customers are paying for and a unique reference number to make it easy to track.
Most importantly you must include your payment details!
Tip 2 – Payment terms
It is important that your payment details and terms are clear. Include the due date of the invoice, either in days from the date of the invoice or a specified date. You can also include details of a deposit if required and details of any late penalties.
Tip 3 – Payment options
Include information about how your customers can pay, ensuring your bank details are clear including your full business name as it appears on your account.
For regular services provided you may even consider getting a regular payment set up with the customer to ensure the payment is made on time and ticks over in the background rather than having to chase up monthly.
Tip 4 – Keeping on top of your invoices
Invoice your customers in a timely manner. If they receive your bill when they are expecting it they are more likely to pay promptly as your goods or services will be fresh in their minds.
Don’t leave it too long! If you don’t invoice on time the likelihood is that your customer won’t pay on time either.
Tip 5 – Debt chasing
Debt chasing is not everyone’s favourite task, but it needs to be done.
How often do you chase your debts?
Are you properly logging customers that are a week or a month late paying and are you chasing them up when you say you will?
You need to ensure you have a system in place and that you are making time to do this on a regular basis.
Making things easier
Invoicing is an essential part of business to ensure the smooth running and healthy cashflow in your business and being paid efficiently by your customers is even more important.
We understand that this can be a time-consuming task and even with the best intentions this can often fall to the side. That is why we work with our clients to find ways to streamline their systems, taking the stress out of invoicing and allowing business owners valuable time back in the business whilst still being on top of their cashflow.
We recommend using Xero to many of our clients, and not just because we are a platinum partner!
Xero is one of the most robust software options on the market, with a huge range of tools and reports available to help you keep on top of your cashflow.
Xero also has customisable invoice templates that you can use and tailor to your own needs, including tight payment terms to ensure you are completely covered when it comes to late or unpaid invoices.
Xero enables the user to track the viewed status of their invoices so if there’s a bounce back from an incorrect email address you can sort this as soon as possible. Also if you are waiting for a payment you can check if the invoice has been viewed.
In addition Xero has useful add-ons such as GoCardless which integrates seamlessly and automatically tracks which customers have paid. GoCardless is perfect for regular customers. You set up direct debits which are collected automatically when you invoice them and can be used for recurring or one-off invoices when you agree a payment date with your customer.
Finally, you can set Xero to send payment reminders on your behalf so there’s no need for chasing.
Automated systems exist to help you streamline the more time-consuming and tedious areas of your business and introducing software into your invoicing can help to do this.
Making the move to digital software can be daunting and whilst these tools sound great a lot of people don’t have the time to learn to navigate a new system. That is why we offer training packages, system implementation and ongoing telephone support to our clients.
If you would like to lean more about the software options available to benefit your business and how you can improve your invoicing to get paid faster, contact Bradley Medhurst who manages our cloud accounting team.
The content in this blog is correct as at 22nd December 2022 See terms and conditions.