There are many leaders in the corporate world today who, justifiably, focus their business development efforts largely on their product - making it, marketing it and selling it. Conventional wisdom says that if you can efficiently run through the entire production cycle and supply chain, you're well on your way to success. This is true, but there's one other element that shouldn't go overlooked, and that's invoicing.
Making a sale is only a theoretical guarantee that you'll bring in revenue. Cash is promised to you, but it's not yet physically in your hands. Invoicing customers and collecting debts is the only way to keep the cash moving and turn your development goals from theoretical to real.
You can't develop your business with just a stack of unpaid invoices. The next step is turning them into cash.
So what goes into an invoicing strategy, anyway? The following guide should make that a little clearer.
Automating the cash flow process
Many companies strive for robust sales numbers and the big stacks of invoices they yield, but it's important to note that that isn't the end goal. You can't develop your business with just a stack of unpaid invoices - the next step is turning them into cash.
The Huffington Post recommends investing in the talent and technology needed to automate this process. If you have the right tools in place to make invoicing customers and collecting payments automatic, it can be a major stress reliever, freeing up your time and energy to focus on other tasks.
When you automate invoicing, you can standardise your payment policies so that every customer will know the score. Whether you plan to demand payments from your clients within 15 days, 30 or any other period of time, it's good to get the rules in writing early in the process so they'll be easy to enforce later. If you ever have a conflict with a customer over an unpaid debt, you can calmly and professionally point to the rules and collect what's yours.
Fulfilling your record-keeping obligations
Another essential part of the invoicing process, and one that often goes overlooked, is keeping good records. If you think the invoicing process is over the moment a customer pays up, you're mistaken. Even after payment issues are settled, it's important to record any and all details of the cash flow involved in each transaction. This might come in handy later, whether you're trying to fix discrepancies in your bank accounts or deal with a potential ATO audit.
According to the Australian Taxation Office, there are fairly basic rules in place governing the cash flow records that businesses are required to keep. Many of them are common sense - for example, your records must be written, in English and detailed enough to explain every single transaction you've made.
The other key stipulation here is that records must be kept for a long time - five years is basically the minimum, and for some sorts of records, it's even longer. It might be worthwhile to invest in some filing cabinets for storing financial records at your place of business.
Getting a financial boost when you need it
Keeping good financial records is important for another reason - it can alert you to cash flow issues you didn't realise you had. If you take a look at your ledger and notice a serious issue with collecting debts and keeping your money moving, it might be time to ask for help. That's where invoice finance comes in.
Dealing with an uncertain debt collection landscape can be stressful, but invoice finance removes the stress from the process. There's no reason to worry - you can get up to 90 per cent of the funding you're looking for within hours. This makes it easy to invest in your company's future with confidence.
Earlypay has supported Australian SMEs with fast and flexible alternative funding solutions for more than 20 years. Our business line of credit, invoice finance and equipment finance products allow business owners to proactively manage their cash flow, freeing up your working capital for investing in growth. To chat about whether our solutions could be right for your business, call us on 1300 760 205.
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].