A lot of small business owners are struggling with cash flow issues, and it often comes down to bad billing procedures.
In fact, you would be surprised at just how much difference a few simple billing and invoices changes can make to your financial health.
So without further ado, here are five big billing mistakes that are hurting your cash flow.
#1 – Not Invoicing Regularly
You need to invoice your customers on a regular basis, and you need to be consistent about it.
If you only invoice once in a while, or if you’re sporadic with your invoicing, it will be harder to stay on top of your cash flow.
Try to invoice customers at the same time every month, or even better, every week.
Getting into a regular invoicing routine will make it easier to predict and manage your cash flow effectively.
Furthermore, it means that you’re less likely to forget to invoice someone, or to follow up on an overdue invoice.
#2 – Lax Payment Terms
Your payment terms need to be clear, and you need to enforce them consistently.
A lot of small businesses are too lenient when it comes to payments, which can really come back to bite you.
If you’re not careful, you could end up waiting weeks or even months for payments that are overdue.
As a general rule, you should always try to get paid as soon as possible. That means setting clear payment terms, and sending invoices out as soon as the job is completed.
Don’t be afraid to follow up on late payments, either.
A simple phone call or email can often be enough to prompt a customer to pay an overdue invoice.
#3 – Not Using Invoicing Software
If you’re still using paper invoices and manual billing procedures, then it’s time to make a change.
Nowadays, there are plenty of excellent invoicing software programs available, and they can save you a lot of time and hassle.
With invoicing software, you can automate many of the tasks associated with billing, such as sending out invoices, tracking payments, and following up on overdue invoices.
Co-op Bank gets Sh. 6.3 billion from EU bank for lending to SMEs
This can free up a lot of your time, so that you can focus on other aspects of running your business.
Invoicing software can also help you to become more efficient and organised, which will save you money in the long run.
If you’re not using invoicing software, make the switch today.
It could make a big difference to your cash flow.
#4 – Failing to Itemise Products and Services Clearly
If you want to get paid promptly, it’s important to make sure that your invoices are clear and concise.
That means itemising products and services clearly, and providing a detailed breakdown of costs.
Customers should be able to look at an invoice and understand exactly what they’re being charged for.
If they can’t, they may be less likely to pay promptly.
Invoicing software can be a big help here, as it will often allow you to create professional-looking invoices with itemised line items.
Take the time to set up your invoicing software properly, and make sure that your invoices are clear and easy to understand.
Each query you receive slows down the payment process and delays money from reaching your bank account, so it’s important to get it right.
#5 – Neglecting Branding
Your invoices are a great opportunity to promote your brand, so don’t neglect them.
Your customers should instantly know that an invoice is from your company, even if they’ve never seen one before.
Make sure that your company logo and contact details are prominently displayed on each invoice.
You want it to be memorable; invoices that stand out get paid faster.
You should also consider using branded invoice templates, which you can easily create with most invoicing software programs.
Branding will give your invoices an air of professionalism, so don’t neglect this opportunity to impress your customers as part of the post-sale journey.
Summary
If you’re struggling with cash flow, there are many simple steps that can help.
We recommend taking the time to set up your billing process carefully and effectively so that it’s a breeze.
That means automating tasks like sending and following up on invoices, and creating a regular schedule that’s easy for you and your customers to follow.
There are also plenty of great invoicing software programs that can save you time and help you become more efficient.
Finally, don’t forget to brand your invoices.
This is a great opportunity to promote your business and make a good impression on your customers.
By taking these simple steps, you can improve your cash flow and keep your business running smoothly.
