Cash flow is the life of your business, so getting paid on time is critical for a startup.
Sometimes your business ebbs and flows because of seasonality and other issues, but one thing you can control is your invoicing process. Jamie Sutherland, president of U.S. operations at online accounting firm Xero, offers a number of tips to increase the odds that you’ll get paid on time and in full.
- Set your own payment terms, including invoicing dates and due dates, and be clear with your customers about your terms. For example, you may require a signature on estimates and include due dates in written communications with customers.
- Inquire about your customers’ payment cycles ahead of time. Some may be trying to spend budget toward the end of the quarter or year and might welcome being billed upfront.
- Keep a detailed record of services completed and products supplied, including any inventory used and time to be invoiced.
- Make invoices clear and easy to understand, and address the invoice to the person making payment. Ask for a secondary contact in case the primary contact is out. And invoice as soon as possible after products and services are delivered.
- Try late payment fees and prompt payment discounts.
- Have a timely system of reminders, monthly statements and phone follow-ups.
Adapted from 10 Tips to Help Small Businesses Get Paid Faster at Small Business Computing.