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Getting paid and managing cash flow is crucial to the success of every small business. But invoicing often feels repetitive and tiresome – particularly if you’re picking up this task at the end of a long day working on the product or service for your customers. Luckily there are several great tools to help you stay on top of this critical process.
Why is it important to stay on top of your invoicing?
Your customers will be expecting invoices and it shows you are professional if you are issuing your invoices promptly. It can often become confusing for the client or customer if you are sending invoices inconsistently and without structure – not to mention the havoc it can wreak on their own bookkeeping. You also need to keep clean invoicing records to ensure you are completing your taxes correctly.
Invoices can’t be avoided so it’s best to set up a clear and organized process sooner rather than later.
What tools can help you manage your invoicing?
If you are using accounting software, you’re likely already aware of or using its invoicing features. Either way, it’s prudent to check with your accountant on how to leverage these features most efficiently.
If you are a newer business and haven’t yet chosen your accounting software, check out these top-of-the line tools:
- Xero
- Quickbooks
- Sage
- Freshbooks
- Bill.com
- Stripe
Be sure to do your research, speak to other small business owners to find out what works well for them, and get feedback from accountants in your area on the best software for your industry, size, and unique invoicing needs.
Effective invoicing = better cash flow
Be prompt
To put it simply, if you need to issue invoices to your customers, you need to do it accurately and promptly to ensure you are getting paid. If you delay sending invoices that often means your customers will delay making their payments. That causes a significant lag between completing the work - that may have resulted in upfront costs for you - and when you actually are paid for your work and valuable time.
Easy payments
Be sure to make it as easy as possible for your customers to pay. Include the bank details on the invoice and even look at other providers to accept credit card payments such as Stripe and Square.
Customer reminders
It is also worth setting reminders to prompt your customer to pay. Waiting the length of your payment terms often means it drops off the customer’s radar. Sending an email reminder or using automated software can be very beneficial to encourage quicker payments.
Virtually every small business will face challenges with their cash flow while waiting for invoice payments to come through, so be sure to have an effective working capital facility available when you need it.
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