Avoiding your invoices? Fifteen tips for rapid cash flow

By

Back to Top Comments Email Print

In these times, large companies are paying even slower than before. And small companies may be struggling and paying slower than usual.

Here are invoicing tricks you have control over to achieve faster cash flow. These apply to invoicing for services and projects that you deliver.

Invoicing tips for getting paid faster and achieving faster cash flow:

(1) Invoice immediately. Don’t wait until the end of the month or even the end of the week to invoice. Invoice the day the project is done or the item(s) are shipped. If you wait a week or two, that’s more time you’ll need to wait for the check.

(2) Invoice in progress payments. If you are providing a service that has definable progress, get agreement at the beginning of the project as to what project portions can be billed and the interim progress criteria.

(3) Determine if email invoicing would be better. Emailing an invoice is faster, harder to ignore and easier to do after hours.

But don’t automatically assume that email invoicing is the best choice for your client. Since most invoices arrive in the mail, the client already has a routine method of scheduling and managing payment flow. If the client is a busy person with an assistant who writes the checks, sending an email is an extra step that may not be convenient for the client.

Similarly, that type of client should never be handed an invoice in person, either. It is too easy to misplace before it gets back to the bill payment desk.

(4) Have a due date, not just “due on receipt.” Use a due date on the invoice that is about 10-12 days from the mailing date. That way it will be due about seven-10 days from when it arrives in the mail.

The client can then put the invoice in the file of items to be paid soon. In most cases, that would be at the next weekly payment cycle. Companies that pay in 30 days or 45 days will not adhere to your due date anyway (sadly).

(5) Detail your invoice. Write a detailed description of the items, service details and dates that the invoice covers. Sometimes clients will dispute an invoice simply because they want to delay paying. Having a detailed account reminds the client of all the work you did and the items you delivered.

(6) Put the client’s phone number on the invoice. This actually increases the probability that you will get paid. Also, it saves you time if you have to call later to ask about payment.

For larger companies, include the purchase order number and the project manager’s name (your contact).

(7) Set payment terms at the start. Before you start the project or deliver the items, specify the payment terms.

Most companies routinely have their own payment policy. Discussing it up front establishes you as a professional and helps ensure you get paid.

It also sets the expectations. Some companies pay on the same day each week, on the same day each month, or simply 30, 45 or even 60 days after receipt. While you may not be able to alter the payment schedule, knowing it will help you plan better.

(8) Find out the prerequisites. Some companies require your employer identification number be on record; some require your insurance information. Others require there be a purchase order even if the person who purchased from you may not have clearly stated that. So when working for a larger company, find out who (specifically) handles payment.

Double check the payment terms at the very start of the project so you collect any needed documentation along the way. This speeds invoicing and eliminates reasons for slowing your payment.

(9) Try to get a deposit up front. If you have to buy materials specifically for that client which cannot be returned without cost, ask for partial payment to begin the project. This also verifies that the client is committed.

If you haven’t already been doing this, it may seem harder than it is. It gets easier after you’ve been burned a couple times.

(10) Offer credit card payment. Even in larger companies, it may be a convenience to pay by credit card. Credit payments often show up in your account within 24 hours of payment.

(11) Pay attention to changes. Clients frequently change their product orders and project needs after the initial order has been started. Give them ongoing detailed reports of work progress on projects and items ordered or shipped.

Having a clearly defined documented change process up front will help you get paid when there are project or material changes.

(12) Build a document trail. Keep track of requested changes in writing. Be able to document extras that the client requested.

Sounds cumbersome? Remember that the person writing the check may not be the same person who works with you on the project, but may have responsibility for payment accuracy. Help them out and help yourself get paid by creating and keeping the documents they’ll need.

(13) Send copies with past due dates. Make it a routine to send copies of invoices 25-30 days after the original invoice. It is possible for invoices to be genuinely misplaced.

If clearly marked as “past due,” it may instill a bit of urgency if your client is a sole proprietor or a small company. Statement copies also can look like your accounting system automatically sent it, so your relationship is better preserved.

(14) Arrange for someone else to make collection calls. Have your assistant, accountant, spouse, business coach or some other person call the client.

People are embarrassed about not paying, and having someone else call achieves several purposes. It preserves your relationship; it looks like you have a system, which you do; and it gets you paid when they simply need a friendly reminder.

(15) Use your accounts receivable reports. This report shows how many days payment has been due from each client. Use it as a trigger system by deciding how many days before you make the first friendly call, send a statement or transfer to collections.

Adding these tips and tricks to your invoicing process may seem like a lot of work, but it helps you to avoid the painful consequences of slow cash flow.

advertisement

Comments


Be the first to comment.



Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.

Post Comment
     View Comment Policy

Advanced search
Sponsored by
advertisement
  
  
advertisement
  
  
advertisement
Back to Top