Some business never get the money they are owed. And yet, some seem to have no problem getting paid on time. What is their secret? A good invoicing system. Here are 9 invoicing tips that has helped countless small business owners and will help you maximize your cash flow as well.
1. First, Set Payment Terms
The first thing you should do before sending any invoice is to set exact payment terms with your customer. That will prevent any awkward situations to arise once the time to pay is at hand.
Consistency is the key here. If you can, send the client an estimate (in writing) to let him know how long the work will take and how much it will cost. Once the work is done, send the invoice. Of course, the invoice and the estimate won’t be exactly the same, but they shouldn’t differ by a too large margin. You don’t want to surprise the client with a cost you haven’t mentioned before.
2. Don’t Wait to Send an Invoice
Get into the habit of invoicing as soon as the work is complete. That way, your customer will have less chance to “forget” about you. Think about it. If someone does something nice for you, how long do you actually remember to “return the favor”? Those kinds of things unfortunately tend to slip from our minds pretty fast. Don’t let your work slip from the customer’s mind either.
3. Make Sure You’re Invoicing the Right Person
Let’s say your company provides content writing services for a big client. In that case, you’ll probably be working the most with the marketing department. Should you be sending your invoices to the head of Marketing? Probably not as he has other things to do (Marketing related, you know). Maybe your invoice gets buried under a ton of papers or maybe they don’t have the authority to sign at all. Be sure to ask who will be handling the invoices before you start sending them. That way, you won’t have to go back-and-forth with the client asking them when your invoice will be paid.
4. Number Every Invoice
Numbering invoices is a good way to easily refer to them at a later date and track payments. Most invoicing software will automatically number your invoices, so you should already be covered. However, here’s the trick. If you just started using an invoicing software, the numbering will naturally start with #001. That may not be such a good thing, since the clients may perceive you as lacking experience. To avoid this, start with a higher number.
5. Set Payment Terms that Best Suit Your Business
It’s best if you send invoices with an actual due payment date. That way, the customer will know by which date they need to pay and can act accordingly. “Payment upon receipt” doesn’t tell much. When did the customer receive it?
Also, you should probably refrain from the standard 30 day arrangement and instead use one that suit your business more. Maybe you’re in a fast-moving industry where you need to have a fast cash flow to keep your business running and 30 days is too much.
6. Don’t Forgive Late Payments
One of the biggest questions is what to do with customers who are late with payment? Sure, you can stop working with them, but if they are bringing you a nice business, why would you? Well, for those kinds of “forgetful” customers, you need to set an interest on late payments.
Make it crystal clear that you will charge the customer a late payment fee (an exact number, rather than a percentage) if they are late with payment.
7. Use an Invoicing Software
Gone are the days when you could type an invoice on a piece of paper and send it to the customer. And it’s a good thing they’re gone too, because using an invoice software makes things much easier for both you and your customer. There are plenty of professional invoicing tools out there, but so make sure to check this article to find the Top 5 Invoicing Software for Small Businesses and Startups.
8. Get Someone to Help with Invoices
When you’re just starting a new business, you’ll probably be doing the invoicing yourself. But as your business hopefully grows and more customers keep coming, there will naturally be other things to keep you busy. In that situation, it get very easy to screw up on the paperwork, send an invoice to the wrong client or just not have the time to play debt collector (and trust me, you’ll have to do it once in a while). Or maybe you’re just not the sort of person to ask people for their money. Whatever may be the case, hire someone, either in-house or remote to handle your invoices for you.
9. Remain in Communication with Customers After They Pay the Invoice
This is one thing that many business owners forget to do and it is costing them a lot of future business. You shouldn’t end the communication with the customer immediately once you get paid. The least you can do is send them a thank you note, letting them know you appreciate doing business with them. You’ll be surprised how much this means to people and how much repeat business it will net you.
There you go. 9 invoicing tips every small business owner should keep in mind if they want a healthy cash flow and a good rapport with customers. If you know of any other invoicing tips, please share them with us in the comments below and don’t forget to sign up for a free Purchase Order Plus trial.
It would be really nice if you could nail your forecasts 100% of the time. Unfortunately, that’s just not possible. Every sales cycle offers a different challenge, and while you can predict some things based on the previous cycle, sometimes things don’t work out the way you thought they would. In this article, we’ll go over 6 most common sales forecasting mistakes your business can make as well as what you can do to avoid them.
1. You’re “Assuming” Your Forecasts
Look, sales forecasting is not a precise science. It’s a bit like cooking in that you do it “per taste”. But just like in cooking, there are certain rules you can get over. That’s why you shouldn’t base your forecasts on just assumptions or “gut feeling”.
Today, companies that take a careful look at data from past performance out-perform those that rely on intuition, so be sure you place yourself in this first group. If nothing else, data can give you a good idea of what went wrong, while instincts are not that measurable.
2. You are Not Responding to Market Changes
Now, every market is different and presents its own challenges, but by and large, you should always be prepared to respond to changing market conditions. Of course, this implies that you already have a good grasp on your particular market, or a “finger on its pulse”. This will allow you to respond fast, but not rush headlong into a costly mistake (understanding market risks is huge when it comes to sales).
3. Not Knowing What the Customers Want
If there is one source that your sales forecasts should look upon above all else, it’s your customers. You want to be in constant touch with them to know what they are thinking, especially about your own product. And I don’t mean some metaphorical touch, but actual contact with customers. Don’t separate yourself from your prospects, talk to them, meet them face to face, on the phone, on email or chatbot and find what their opinion really is, rather than guessing it.
4. Not Understanding all of the Market Factors Responsible for Creating Adoption for Your Product
If you think all you need for the market to adopt and accept your particular product are good quality, low cost and ads, you’re sorely mistaken. There are many more factors that will create (or prevent) the adoption of your product and it’s up to you to figure them out. Now, you may not be able to do this exactly the first time you try, but if you’re paying attention, you’ll be able to predict these factors and even use them to your advantage in your future sales cycles.
5. You are Using Wrong Product Timing Info
If you have too many people raising a child, than that child won’t receive the best care. Think about your product as a child as well. Especially in the introduction phase, everybody from the product manager, to engineering, to the executives in the upper management, will have something to say about how to “raise the child”. Some will want to get it out too quickly, some will look for unnecessary features and so on.
One of the worst things for your forecasts is working with unreliable product timing information. The upper management will often be on your neck to get the product out now, unaware of all the factors why this shouldn’t happen. It’s up to the product manager to tell them to take a breath, because otherwise, your forecast will be wrong.
6. Not Learning from Past Forecasts
A lot about sales forecasting revolves around learning from your past mistakes. Forecasts from the past sales cycles play a big role here, so make sure you learn as much from them as you can. In particular, you want to measure the right metrics and not those that make you appear in good light when presenting your results to the upper management.
Forecasting may not be exact science, it involves some trial and error, but if you manage to avoid these six sales forecasting mistakes listed in this article, your business will be on the right track for the future.
Know of any other sales forecasting mistakes that we forgot to mention? Let me know in the comments below and don’t forget to sign up for a free Purchase Order Plus trial today.