Nearly one-half of all new companies fail during the first five years in business. This is a scary statistic for any new or experienced business owner. One obstacle many business owners face is dealing with a stagnant cash flow. Without enough cash coming in, having the funds available to operate your business properly can be extremely difficult.
If you are having trouble maintaining a healthy cash flow that can keep your business afloat, it may be time to reexamine your invoice method. Having a structured invoice method in place can enable you to get paid fast and keep the cash flowing.
Here’s a list of best practices for developing an invoice method that will help to improve your cash flow.
1. Accounting Software
If you haven’t done so already, now is the time to invest in an efficient accounting software platform. This software not only improves the speed and accuracy of the accounting process, but it makes tracking invoices and aged debts easier. This will allow you to stay on top of your accounts and contact customers with overdue invoices.
2. Dedicated Bookkeeper
If you are so busy running your business that you’re falling behind on getting your invoices sent out, you should consider hiring a dedicated bookkeeper, even on a part-time basis. This will help get your invoices sent out quicker, which also will speed up the payment timeline and greatly improve your cash flow.
3. Clear Payment Terms
Don’t make the mistake of not including clear payment terms on your invoices. Your customers should know exactly when payment is due. In most cases, the timeframe for payment runs anywhere from 15 to 45 days. You also may consider offering a discount on early payments to encourage your customers to pay as quickly as possible.
4. Complete Invoices
The last thing you want to do is to give your customers any reason to delay payment. You should create clear and concise invoices. Make sure your invoices include all the pertinent information, such as pricing information, your business contact information, payment address, customer contact information, acceptable forms of payment, payment date and date of service.
5. Up-to-Date Contact Information
Have a system in place to quickly update contact information, when necessary. Sending an invoice to the wrong email or physical address could delay payment by a matter of weeks.
Putting these best practices in place when developing your invoice method can improve efficiency and speed up the customer payment timeframe. This, in turn, can stabilize your cash flow, which can improve your business success rate to help you make it well past the five-year mark.