Getting the job means nothing unless you get paid. John Rampton, writing in Entrepreneur.com, has five tips for significantly increasing your business cash flow.
Rule No. 1 is to establish clear terms and conditions prior to starting any work, Rampton advises. This means specifying whether checks or credit cards are accepted and whether the payment is due when services are rendered or after an invoice has been issued. Also spell out whether late fees will be charged and whether that fee is a flat amount or a percentage of the amount due.
Rule No. 2 is to shorten your payment terms. The old-school 30-day invoice is a throwback to a time when most bills were paid by checks that took time to write, receive and clear. Rampton says that in today’s world of electronic payments, there’s no need to wait 30 days to be paid unless you are dealing with the bureaucratic red tape that comes with doing business with a large corporation or government entity. If, on the other hand, you’re a contractor who’s just completed a job for a homeowner, you can create an invoice and take a credit card payment on your smartphone before you leave.
If you must issue an invoice, timing is everything, Rampton says. Rule No. 3 is to email your customer at a time their inbox isn’t bombarded with other mail. Weekends are best, but if you must invoice during the week, then Tuesday just before or after lunch is best. If possible, schedule electronic invoices to arrive biweekly in sync with your customer’s pay cycle to increase the odds you’ll be paid quickly.
Rule No. 4 is to get a down payment from your client if any part of the project requires you to pay a supplier, vendor or freelancer. Otherwise, you’re just extending credit.
Finally, automate your invoicing whenever possible. Invoicing software is designed to make the task as easy as possible for small business owners. Information such as contact details, job descriptions and prices are saved so that you don’t have to waste time re-entering the same information. Automatic software also handles recurring invoices, expense tracking and payment reminders.