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Most small businesses rely on invoicing to get their payments. This means an ineffectiveinvoicing process can have a negative effect on your cash flow. And since businesses largely depend on cash flow, you can’t pay your vendors, staff or loanswithout enough cash. As a result, poor cash flow may hamper your operations.
You don’t want to get caught in the last minute rush; calling clients to remind them of payments or trying to make out which bill to ignorewhen you should be receiving checks from customers. Find out are three main invoicing blunders to avoid.
- Invoicing Mistakes
Ensure to verify the information you give in your invoices, clients may refuse to pay off an invoice with errors. And in such cases, most clients willdemand a new invoice that may take time— and lead to delayed payment.
To avoid minor mistakes, always make sure you keep clear records. For instance, use a program that enables you to keep track of time and expenses related to every customer and project so you can simply prepare invoices based on the data. Also, thoroughly proofread all invoices before sending to point out any mistakes.
- Late Invoicing
If possible always send invoices soon after you have rendered the service. And preferably for your convenience, try to invoice before you deliver the product or service. Don’t wait to send it too late as the client may fail to rememberthe service offered. They can’t recall it clearly, and so they may easily overlook it. This way you experience irregular cash flow, you don’t who will make payments when.
- Tolerating late payments
If you tolerate delayed payments consumers will always want to pay late. Since everyone has obligations, if you let a hefty late fee go unpunished this time, next time the client will most certainly assume you are comfortable with late payments.
To stop this habit, you should implement late penalties—perhaps a percentage of the balance ora nominal fee. But you may alsorefuse to offer the clientyour services until he clears his debt. On top of that, they should also sort any collection or transfer fees you need to collect that payment.
Even though you can always seek for start up business cash advance from providers like First American Merchant to lift you off the ground, it’s important to maintain a regular cash flow which is only possible if you augment your invoicing techniques.
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