1. Send Invoices Right Away
Sales and invoices are the lifeblood of a small business. You can’t get paid if you don’t send invoices. Simple as that. Make sure you stay on top of invoicing your customers. The quicker you send invoices out, the faster the cash comes in and always be clear about your terms for payment on the invoice.
If your current invoicing process is tedious, consider switching to a cloud-based accounting software with attractive, easy to create invoices. Talk with our team and we can put you on the right track.
2. Get Customers To Pay Invoices On Time
Another key to increasing your cash flow is getting your customer to pay their invoices on time. We know this is easier said than done, but there are plenty of practical strategies to increase the likelihood of getting paid faster. Here are some of our top invoicing tips:
Set terms
• For new clients who don’t have a trading history with you set seven day terms.
• If you are service based business try a 50% deposit and balance on completion of the project.
• Set incentives for early payment - Consider offering a discount to customers who pay their invoices before a certain time.
• Set late payment penalties out clearly. You can often include this in your terms and conditions section on your invoice. Do some research on what a normal late penalty policy looks like for your industry before implementing.
• If you are a business on the go where customers receive
services or goods immediately and directly invest in the
technology to take payments at the time of job completion
or product provision.
• Set follow up invoice reminders - Many accounting programs have built-in invoice reminders that you can set up to automatically send to late paying customers.
Not sure what your business needs - call us and we will be able to find the right solution for you.
3. Conduct a price review
If you are hurting for cash flow, it may be time to consider
increasing the prices for your products or services. Ask yourself:
• What are my competitors charging?
• Have the prices for equipment or inventory increased?
• How much manpower does my inventory assembly or services require?
• Do my prices outweigh the time put into my creating my
products?
• Are my prices too low? Do my products come off as cheap
or valuable?
You want to strike a balance between keeping your prices competitive and fairly compensating the hard work you and your employees do. At the end of the day, you want to make sales, but you also want to make a profit. If your prices are too low, you may be selling yourself short. In some cases, lower prices can also make your company seem less qualified.
At Grace Team Accounting | Tauranga Accountants we help you keep your finger firmly on the pulse of your business. Providing real time reports helps you to monitor your cashflow position, and plan effectively for business growth and future positioning. Find out more today