23 Lunch and Learn. The simplest way to speed up your cash collections
Written by Julia Bickerstaff // April 16, 2012 // Daily Juice // No comments
Ever year I order a tall, fresh, aromatic fir tree from Elfhelp.
The guys from Elfhelp not only deliver the Christmas tree, but they also clamp it into the funny little tree-foot-thing and get it to stand up sturdily. As we’ve got a history of finding our Christmas Tree lying prostrate on the floor, it’s the fact that they do the latter that particularly appeals to me.
But I digress.
Our tree was delivered on 7th December at about 9pm (I remember because the children were waiting up for it) by an exhausted chap who had been installing trees for 14 hours straight. I recall asking him how I should pay for the tree and he wearily said that someone would email me the invoice in the morning.
Seems we both forgot.
But not completely. For out of the blue, on Sunday 15 April, an email invoice arrived from them. Just, um, 130 days late.
It got me thinking, so today’s recipe is about invoicing!
What it is
A technique to get invoicing done, promptly.
Why it works
Well of course the later you invoice the customer, the later you receive the cash. And as cashflow (or lack thereof) is such a huge frustration for most small businesses it makes sense to get invoices out as as soon as possible.
But while we know that, we still don’t do it!
So today’s tip is about getting youself into an invoicing routine. That way, even when you are so completely too busy to do a-n-y-t-h-i- n- g you still send them out!
What you do
First of all you need to know why you are a recalcitrant invoicer. Here are the top five reasons. Have a read of them and see if any sound familiar:
- Too busy
This is probably the Elfhelp reason. Sometimes work spirals out of control and you just don’t have time to do your business admin.
If this happens to you then I suggest you pay someone to do your invoicing for you. It’s the only way you will turn your hard work into cash. It will be worth every penny.
- Laziness
This sounds unkind, but let’s face it, invoicing isn’t the most fun task. I think many of us have been guilty of a dash of invoice-procrastinating.
- Unfriendly invoicing system
Some accounting systems are tricky to navigate for the uninitiated which makes invoicing painful. If this sounds like you there are plenty of simple accounting packages (like SAASU of the recent blog post) which make the process of invoicing very simple.
- Lack of information
Sometimes you need to gather some information before you can prepare the invoice. Maybe you need to calculate the number of hours you have worked for a client, or the cost of something you have bought on their behalf. If the information is hard to come by it’s tempting to slip into invoice-procrastination.
A useful tip here is to start a process so that you gather the information you will need as you do the work. It may be as simple as a notebook for a timesheet, or a file of purchased-on-behalf-of-customer invoices.
- Pricing
Pricing is often the real reason behind invoice-procrastination. When we haven’t agreed the price with a client upfront we worry about how much to charge. And of course the best way to get around that little problem is to, er, not do the invoice.
Ugh!
Invoicing should never be a pricing issue. If this happens to you be bold and agree the price upfront with the client. If you are at all worried that the scope of the work has increased speak about it with the client early on, don’t wait for invoice day!
Speaking of ‘invoice day’, the next thing to do is to pick a regular time to do your invoicing. Personally I think you are best to do invoicing at least once a week (daily if you can).
Remember that you won’t get paid until the customer has the invoice (and even then business customers are prone to take upwards of 60 days from the invoice date to pay!).
If you always do your invoicing at the same time each week (say, Tuesday night) then it becomes a habit and you won’t forget. When you get busy you stick to the same schedule. It’s like brushing your teeth, you don’t skip it just because you have a lot of work on.
If you work with customers on long projects (like interior designers do, say) you may be tempted to invoice monthly. My advice here is that it’s fine to invoice a particular client monthly but don’t invoice all your clients on the same day. Remember again that the sooner you invoice, the sooner you get the cash. If you stagger your invoicing across the month (by doing a few customers each week) you should, in theory at least, get a flow of cash into your business rather than the occasional lump.
And here’s a what not to do. My son’s dear medical practitioner invoices just three times a year. I asked him for an invoice in December and he told me his next invoicing date wouldn’t until 2 April! He may have a very good reason for infrequent invoicing, but don’t even think about it unless you have a stash of cash to lean on.
Finally, if you think you are a slow invoicer, take heart. Twenty years ago my parents had an arty wooden staircase built in their house. They didn’t get the invoice until five years later!
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