5 Common Invoicing Mistakes That Can Hurt Your Business Cash Flow
You’d be surprised at how many businesses make one or more of these mistakes and land up not getting paid on time. Every customer payment delay can hurt your business cash flow, so it’s important to keep on top of your invoicing every step of the way. If you struggle with unpaid invoices, it’s wise to apply for invoice factoring, which gives you an immediate cash advance for your invoices.
These are the 5 most common invoicing mistakes:
1. Delaying your invoicing
The sooner you invoice your customers, the sooner you’ll get paid. What’s more, your customers will not chase you up to invoice them – it’s your responsibility to ensure you get paid. It’s ideal to invoice immediately upon completion of the work (or beforehand if an upfront down payment is required), so that the project is still fresh in your customer’s mind.
2. Not limiting payment terms
Payment terms can vary from cash-on-delivery to 30/60/90 day payments. It’s best to offer a shorter payment term, so that your cash-flow remains constant. A happy medium is a two-week payment term. If it’s not possible to limit payment terms, invoice factoring will help you close the cash-flow gaps.
3. Surprising your customer
No customer likes payment surprises (unless it’s a big discount). Make sure that your invoice amount matches the fee that you agreed upon. Created an itemized invoice with clear itemized service or product breakdowns. Set customer expectations throughout the project, agreeing in advance on any possible cost increases. Your bill should match these expectations. Any unexpected costs will delay payment and also negatively impact on your relationship with the customer.
4. Not following up
It’s all very well to send an invoice, but if you don’t follow up on late payments, your cash-flow will suffer. Set up a strict payment follow-up process and contact non-payers at set intervals. If you use a cloud-based invoicing system, you can schedule automatic follow-up emails and notifications.
5. Not making it easy to pay
Customers pay quicker if payment is just a click away. Stipulate payment details on your invoice, offering them online payment methods that are quick and easy to make.
Constant cash flow is essential for every small-to-medium business and invoicing practices have a major impact on business cash flow. Make sure that your invoicing processes and practices are on track.