To a significant extent, the success or failure of your business will be predicated upon the health of your cash flow. If you can collect payments from customers quickly, you'll also be able to turn around and invest the money you make in improving your business without delay. For startups looking to achieve ambitious growth goals, there's no more important step you can take than getting your cash flowing.
The moment someone buys your product, you want to send them all the right payment paperwork.
This process begins with invoicing people properly. The moment someone buys your product, you want to send them the paperwork and make all the details clear - what they bought, how much they owe and when they owe it. If you can do this much, you'll have gotten the ball rolling.
This all sounds simple, and yet it's remarkable how many companies fall short in this area. Don't let yours be one of them - figure out your invoicing strategy as soon as you can.
How to write an effective invoice
If you want to iron out the wrinkles in the billing cycle and get working capital into your company coffers quickly, the first step in that process is knowing how to write a good invoice.
According to the Department of Industry, Innovation and Science, the most important thing is to make sure you include all the necessary pieces of information, leaving nothing out. For example: It's important to list exactly what the customer is paying for, in specific terms, and show explicitly which amounts are for which items. Beyond that, you also have to make it clear how people should pay you and by what due date. Omitting any of these elements will only create confusion.
It's also crucial to choose your medium for sending invoices. This might be via email, fax, regular postal mail or any other platform you desire. The key is to choose something your customers will be comfortable with. The goal is to get them settled into a payment routine so they're willing to pay up quickly.
Avoiding some common invoicing pitfalls
Invoicing might seem like a fairly simple process, but you'd be surprised at how often companies make little mistakes that sidetrack them. If you study up on what these mistakes are, you can be more aware of how to avoid them.
BudgetOne cautions that one of the most common mistakes companies make is writing vague invoices that don't clearly delineate what customers are being charged for. If you aren't able to clearly spell out why the customer owes you money, they're unlikely to believe you or have any motivation to pay up.
Other common problems involve timing and location. If you send an invoice late, it hurts your credibility. If you mail it to the wrong address, you're also in for a big logistical headache - poorly delivered invoices tend to be unpaid invoices. If you're careful and detail oriented in everything you do, the entire process should be much smoother.
Do you still need an extra cash flow boost?
Even if you follow all of the above guidelines to the letter, there are no guarantees. Sometimes in business, you do a great job writing invoices and sending them out, and customers still struggle to pay you in a timely fashion, for whatever reason. These things happen.
When they do, you'll want to have a backup source of cash flow - and that's exactly what you get with debtor finance. The beauty of debtor finance is there's no uncertainty about the money you'll get or the timeframe in which you'll get it. If you need quick cash now, reach out to Earlypay today and ask for it. We'll be ready to respond in your time of need.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].