As a business owner, you probably don’t like to lose money, which is something that can happen in many ways, from an increase in federal and state taxes to customer’s preference for a competitor’s lower priced products. However, you may be losing money in a way that you never considered—by failing to turn around invoices quickly after you finish the work.
It’s only too easy to hunker down and play defense when you face financial losses—lower your prices, which will reduce your profits; cut employees, which will reduce how much work you can turn over; or slash advertising, which will reduce your leads. These desperate strategies hurt your business in the long run.
However, there is another way of handling business losses—do more work, get it done quickly, and invoice fast so that you create a positive cash flow. If you can’t control your losses, for one reason or another, bringing in more revenue is the best remedy for cash flow blues. And, if you’re not sure how to invoice properly then it’s wise to consult an invoice guide like this one to learn best practices.
Assuming you have increased the quality and quantity of work that you do, then it’s important to get your invoices out fast and paid quickly.
It’s important to remember why you invoices need to be paid on a timely basis with minimal complications. You need a strong cash flow to pay for capital loans you have taken out and other bills.
With that in mind, here are a few tips on how to invoice like a professional:
3 Essentials for Good Invoices
While a small company may remember your services and why you’re asking to be paid, a big company might forget all about who hired you and why. Consequently, you should include the client’s address even if it’s sent online, as well as the full name of the contact person in charge of your account. This way the invoice will be directed to the right person. In addition, to adding all their contact information (so that they know it’s directed to them), you need to include all your own contact information, too.
Here’s the contact information you should include:
- · Your company.
- · Your name.
- · Your telephone number.
- · Your email address.
- · Your physical address.
Adding all your personal contact information makes it easy for the client to contact you if they have any questions about the bill. Getting invoicing right will speed up receiving payments.
Tell clients why you’re invoicing them and spell out the details of the work you’ve done. Suppose, for example, they hired your company to build a website. Your invoice should not just say, “Website services” or “Building company website.” Instead, list what you did for them and the cost for each item of work. Specify the nature of the work in detail. Also, make it clear whether you are charging on an hourly or project basis.
There are many details about the payment that you need to make clear. Here are 3 things you should have in place:
- A link to your terms of service. This will answer any questions about when you expect payment and what happens if customers miss the deadline. For instance, will you be sending overdue notices, charging interest, etc. This will protect you if the customer does not pay. They can’t claim that you didn’t tell you about the consequences of not paying on time.
- Let them know how to pay you. What types of payment will you accept? Will you accept cash, check, credit cards, or money transfer? Provide all the details on how you can receive the money. For instance, add bank details if you will accept money transfers or state what type of credit cards you will accept if you accept credit cards.
- Reference systems. Your invoice should have numbers for your record books. This will make it easy to find if there are any errors or questions about it in the future.
A neat and concise invoice will increase your chances of getting paid quickly, and there are two reasons why invoicing is the best way to collect money from customers. First, you’re politely notifying customers of your expectations—you expect to be paid by a certain date, not when customers feel like getting around to handling their bills. Second, you’re communicating like a professional. Amateurs expect customers to pay without asking, make phone calls, or send reminder emails. Professionals take the time to craft accurate invoices and use online and offline invoicing tools to deliver them. Managing your cash flow well starts with learning how to invoice properly.