Invoice Your Way to Cash Flow

How you handle your business invoicing process can affect your cash flow. As I've said it many times in this blog, cash flow keeps your business going. It doesn't matter how well a business is doing, it's possible to lose it all due to poor cash flow management.

When you send invoices, do you include a due date? No due date means the customer will put your invoice at the bottom of the pile of bills. Customers tend to go for the invoices due soonest. Don't give your customers permission to pay when they feel like it and add a due date on your invoices.

Now that you have a due date on your invoice, what will you do if the customer misses the date? Your credit card company adds a penalty whenever you miss the due date or don't pay the monthly minimum. If you worry imposing a penalty will strain your relationship—you could also motivate customers to pay early to receive a discount.

Maybe customers are struggling to pay because of the limited payment options. On your invoice, put what payment options you accept. Maybe it's time to investigate more options and even invoice automation. Although adding new options might involve charges, isn't it better to receive your cash now rather than later?

Do you send the invoice weeks after completing the job or delivering the product? That's a delay on your end that you can fix. For products, include the invoice with the product or mail it at the same time. Last time you had a repair person or service come by your house, did it ask for payment upon finishing? Well, there's no reason why your service-based business shouldn't. Do whatever you can to submit the invoice to the customer as soon as possible.

Many businesses require 50 percent payment before starting a service and the rest after finishing. Or they split it into the following phases: before starting, halfway and end of project. This can ease the burden of paying your invoice especially for pricey products and services.

Check your unpaid invoices especially the ones that are way overdue. See if there's a common factor or if a customer is constantly late. For frequently late customers, consider giving them a call. Sometimes a conversation—as hard as it may be—can clear the air and lead to a solution.