There are many components of running a business that go hand in hand. Many business owners assume if sales are constant or growing, a steady cashflow will follow however, this is not always the case.
If your business doesn’t require payment at the time of sale, your invoicing system will impact when and how you are paid for your goods and services.
Is your business’s invoicing system working? Does your business have steady cashflow? Read below to learn more about the importance of a good invoicing system including:
- Prioritise invoicing customers
- Review how often invoices are sent
- Accurate invoicing is essential
- Ensure invoices are easy to read
- Prioritise following up outstanding invoices
Prioritise invoicing customers
While some businesses issue invoices at the point of sale, others issue an invoice after the good or service has been given. As a business owner there may be a long list of items on your ‘to do’ list, however sending out invoices should be a priority. The sooner a customer is issued an invoice, the sooner you can be paid. Regular paying customers equals steady cashflow.
Review how often invoices are sent
There are many costs involved in running a business. Business owners have a long list of expenses payable each week, month and quarter. If you are up to date with sending invoices however are still not seeing steady cashflow, review how often you are invoicing clients. If doing an invoice run only once a month, you may need to increase this to twice a month to help with a steadier cashflow.
Accurate invoicing is essential
An invoice should be accurate and easy to read. Incorrect particulars on an invoice can result in payment delays. The customer will query the discrepancy which may result in the invoice having to be re-issued. The longer the delay in a customer receiving an accurate invoice, the longer the delay in receiving payment.
Ensure invoices are easy to read
An easy to read invoice, can reduce the risk of any confusion. Depending on the amount payable, there is specific information that an invoice must detail. It should be easy to read and clearly display all the required information including the total amount due when payment is due by and how to make payment.
To learn more about what details an invoice should clearly state, follow the link from the ATO below.
Prioritise following up outstanding invoices
Prioritising following up invoices can greatly impact cashflow. The longer left before following up outstanding invoices, the longer the invoice will remain unpaid. Be punctual with sending overdue reminders or statements. If you communicate via the post, this can further cause a delay. Consider following up outstanding invoices with an email or phone call for instant communication. Continue to keep on top of outstanding invoices until they are paid.
Bookkeeping Matters can add value to your business by managing or assisting with accounts payable, accounts receivable and debt collection
Bookkeeping Matters are a Registered BAS Agent – Registration No. 91642006 and maintain our certification in primary accounting software solutions. We offer expert advice, guidance and practical applications to help meet your obligations with complete confidence.
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Disclaimer: The information in this article is general information only.