Most small business owners understand how important it is to keep on top of their finances. They may even know about cash flow statements and how these relatively simple documents can help to avoid an empty bank account when bills are due. Yet, they may not keep on top of something crucial to the enterprise's lifeblood and fall down when it comes to actually getting paid. If this sounds too familiar to you, what can you do to rectify the situation?
Made a Sale? Send the Invoice
To begin with, get into the habit of raising an invoice as soon as you cement a sale. Certainly, you'll be busy manufacturing your products or providing a service, but don't be afraid to send over that invoice on day one. Make things easy for yourself as well by having templates in place that can be filled in and sent across via email. It's not as common to use the postal service to send invoices, and your client will expect to get everything electronically.
Making It Easy
Also, you should make it as easy as possible for them to actually pay you. Today, there are a number of online payment processors, and they will typically feature all of the major credit or debit card systems. Don't expect a client to write you a cheque and send it in the mail as this entire process is now quite archaic and will take time to fulfil. If those clients would still rather pay you from their bank account than use a card of some kind, include any EFT details. Give them choices, and you are more likely to be paid promptly.
Clear Conditions
When you were negotiating with that client, you will undoubtedly have discussed your terms and conditions. Ensure that you cover your payment terms and make this clear in the contract. Also, place these terms in bold lettering on each invoice, so there is no ambiguity.
Chasing Up
If a customer has not paid you according to your terms, you will need to act. This can be uncomfortable and may create some friction, or your customer may simply have forgotten to process the invoice. Occasionally it may take more than one prompt, but don't be afraid to ask — and ask again.
Getting Help with Systems
For all of these actions to work to the best effect, you need to put in place systems. If you are far too busy to do it yourself, then you need to outsource the work accordingly to a business accountant. In fact, you should get your accountant to help you set up these systems in the first place so that you have all the templates and processes in place to bring the money into the bank. They'll help you understand your specific cash flow needs and make your financial situation far more predictable.
Share29 October 2021
Good day. I’m Linda and I run two family businesses — building contractor and aged care staff agency. It is quite a feat to juggle schedules and keep track of finances. I have become quite an expert with business management software. I have also learnt the vital importance of having good accountants to give advice and keep bookwork up-to-date. Prior to starting our family businesses, I honestly thought accountants existed to organise tax returns. I now understand that their jobs are much more complex and they can help your business prosper. I started this blog to highlight the numerous ways I’ve found that accountants can contribute to financial success. Please browse through the posts and I hope you find something useful within.