Invoicing System: 7 Practices for Smooth Cash Flow

Irrespective of how heavy or little debt an organization carries, a business only thrives on its daily revenues. This daily revenues not only keep the organization functioning smoothly and allows it to pay its bills but also helps the organization follow an appropriate credit profile with the banks. Now, we will enlighten you on the aspects of how invoicing is a crucial aspect of cash flow. Ideally, invoices are known as the process by which an organization bills its clients for the products and services it offers.

Asking your clients to pay an invoice may not be the primary objective of the day, but you cannot argue about its significance and contribution in making and breaking your business. This is why it’s vital to introduce an appropriate, and professional invoicing system.

But, how can you integrate a proper invoicing system that promotes the cash flow? You can utilize these invoicing practices to form an efficient invoicing system.

1. Using an appropriate invoicing system

You can avoid the manual invoicing and spreadsheets by opting for a cloud-based invoicing system. Adopting an electronic invoicing system enables you to create and send bills electronically. This again saves a lot of money since you will not have to make any additional expenditure for postage, paper, and ink.

Most electronic invoicing systems allow you to build, manage and review invoices on your mobile or computing devices. This means you can manage everything on the go. Also, you can operate your invoice by maintaining recurring payments and setting payment reminders.

Some invoicing systems even inform or notify the clients if the invoice has not been paid off. And then there are other systems that present features like expense management, time tracking, and project management.

2. Provide the information of the client and details of the standard billing amounts/items.

After you’ve opted for an invoicing system, it’s time to manage and organize things properly so that you can begin invoicing clients. You can start the process by integrating your client’s information on your invoice. This includes their basic information, email address, billing address, and the suitable payment method.

With all these details saved, you will be able to create invoices in a lot less time than usual or initiate recurring payments.

This process works well when you have a business that provides a subscription to the clients or has a long-term project to take care of.

You can also save time when issuing these bills by only adding the typical billing costs just once into the system. For instance, if you’re a freelance graphic designer, you would include your hourly charges into the software. Hence, your total bill would be easily calculated.

The crucial thing to remember in this case is that the sooner you issue the invoice, the faster your clients may pay the invoice.

3. Have a professional approach while preparing your invoice

When it comes to the invoice, the appearance and design play a huge role. Often a shabbily created invoice makes way for a lot of confusion and annoyance. This also displays your lack of professionalism. As a result, the client will neither take you seriously nor pay your bills on time.

A meticulously presented invoice offers the client with an impression that you are a professional, and you deserve payments for your services. It also sets your invoices apart from another run-of-the-mill invoice your clients receive on a day-to-day basis.

Preparing an invoice may come across as quite cumbersome. But if you pay close attention, it’s not all that complicated as long as it represents your brand. And to make your brand stand out, your invoice must focus on the following elements.

  • The logo
  • Well- defined terms of payment.
  • The list of products or services.
  • Contact details.
  • The specific invoice number.
  • Due date.
  • A personalized message, thanking your clients for the payment.

The invoicing software comes with the option that lets you drop-and-drag your logo onto a preset system. It can also automatically generate the invoice number if needed. This makes preparing your invoices a lot simpler.

4. You should be polite yet firm

There is no alternative for professionalism in any business, and that has to reflect within your invoice as well.

Always be cautious about the words you use in your invoice, so including terms like “please” and “thank you” actually works in your favor.  Urge your customers to pay by a specific date by including “please pay by X date” within the invoice.

It’s imperative that you are perceived as a professional in order to have a stable relationship with your clients. Treating the clients with respect and kindness will help you to earn their loyalty.

5.  Determine the ideal time and frequency to bill your clients

In an ideal world, sending out the invoice and receiving payment immediately after the services have been provided may still be possible, but the reality is starkly different. The truth is, the longer you delay in issuing your invoices to the customers, your chances of getting your payment becomes thinner. In fact, surveys have pointed out that only 18% of invoices are paid if it’s been more than 3 months.

So when is an ideal time to send out the invoice your customers? And what should be the frequency?

The “one size fits all” policy doesn’t apply here. So you can take note of the following suggestions.

  • If you send out your invoice on a bi-weekly or weekly basis, then proceed with it during the weekends when your customers’ inboxes will not be cluttered with messages.
  • If you follow a monthly basis, the invoices should be created on the first day of the month.
  • When you send out weekly invoices, Tuesdays are typically the best day to go through with it.
  • As for the frequency, you should put all your invoices together so that you can send them across all at once; this will save a lot of time.

Another efficient way to determine the best time and frequency to invoice clients is to inquire them when their pay cycle is and send in your invoices accordingly.

6. Be clear and transparent about the payment to your clients

If the services you provide involves another supplier or a vendor, then convey to your customers up front that they need to be paid as soon as possible. In this case, you can request a deposit that will take care of these third-party expenses. This prevents you from having to push for payment.

7. Always ensure to maintain good records

Keeping track of everything is mandatory, in this case. This way you will have the detailed records to support your invoice, which will be useful in case of any disputes with the customers regarding the bill.

You must keep track of your payments, like which invoices have been paid and which ones have not been paid off yet. Having an invoicing software will help you to manage all these things efficiently, but don’t rely on software entirely. You will have to maintain proper communication with clients and ask for payment when it’s due.

Conclusion

As a parting note, it must be added that with these efficient invoicing practices, you will be able to achieve a seamless cash flow to benefit your business. Go ahead and try them out!

Jijo Thomas
Jijo Thomas is an eminent market analyst with over a decade of experience in the field. He has acquired his MBA degree from the Griffith Business School. He has been serving as an assignment help expert in marketing at MyAssignmentHelp.Com for three years. Follow him @thomasjijo1 for more updates.
Jijo Thomas

Latest posts by Jijo Thomas (see all)

Let's be inbox friends!

Let's be inbox friends!

Drop us your email to receive a weekly digest of our latest blog posts right in your inbox.

To confirm your subscription, please check your email.