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6 tips for quick, efficient invoicing

Make sure to invoice your customers, collect payment and deposit payments immediately to maximize your cash inflows. Here are 6 tips for efficient invoicing.

Your business runs on cash. Accounts receivable are an important source of cash flow, so make sure to invoice your customers, collect payment and deposit payments immediately to maximize your cash inflows. Here are 6 tips for efficient invoicing.

Set limits on free products and services

Do you provide free products and services? When you're trying to land a contract, you always offer some free services such as recommendations, tips, advice and action plans. But make sure you know exactly when you'll start invoicing for your services. Once customers sign on, tell them that all future services will be billed, including after-sales service! Some new entrepreneurs aren't comfortable talking about what their products and services cost. But if you talk price from the outset, there will be no misunderstanding or room for negotiation when you send the bill.

Check the creditworthiness of new customers

Getting paid on time is especially important during the start-up and growth phase. If you receive big orders from new customers that intend to pay later, run credit checks to ascertain their payment histories. If you have any concerns, consider asking for a deposit or down payment.

Ask for a down payment

A down payment is something you and your customer agree on after signing the proposal. Include the amount of the down payment in your quote and follow the same rules for all customers. This will make discussions easier and simplify the contract and invoice management process. For professional fees, it is common to ask for anywhere from 20% to 50% of the total fee up front and the balance when the work is complete. With this approach, you know the customer is serious and you eliminate any concerns you may have about starting the project. It also helps you pay for any upfront costs, such as materials.

Establish your terms of payment

You must establish your terms of payment ahead of time. Include the due date and late payment interest rate on the invoice. For example, write “due within 30 days.” Remember, an invoice is an accounting document, so it can serve as legal evidence in the event of non-payment or a lawsuit.

Number your invoices

Remember to number all your invoices to make processing easier for your customers' accounting departments. Your invoices should be numbered in chronological order. If you don't want your customer to know it's your first sale, start with 100 and continue with 101, 102, 103, etc.

Demand immediate payment

The secret to cash management is to expedite and maximize cash inflows. To boost your cash flow, invoice customers right after you sell a product or service. It's tough to demand payment from a late-paying customer if you sent your invoice late.

Remember that the die is cast during contract negotiations. Don't hesitate to clarify your rates, fees and terms of payment and billing with your customer at the beginning of your business relationship.

Videos

  1. Antonio Drouin(in French only) (1 min 25 s)
  2. Anne-Marie Chagnon(in French only) (2 min 18 s)
  3. François Mainguy (in French only) (1 min 42 s)

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