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In order to have positive cash flow, you need to have cash flowing into your business. That means that sending out your professional invoices and getting paid in a timely manner are your two most important tasks.
However, there are many small business owners out there who just lack the necessary knowledge. Because of this, they make many accounting and invoicing mistakes, which causes their invoices to be paid late—or not at all.
In order to avoid this, you should be vigilant in the knowledge required to send out invoices promptlyto get paid quickly and increase your cash flow.
Businesses also have a cycle of invoices processing, and the larger ones have more strict accounts payable systems. These 11 invoicing terms will help you run your business smoothly. READ MORE Sending out invoices to the wrong person If you have no proper system in place for sending out invoices, you could end up sending the invoices to the wrong person or department.
Ensure the details on the invoices are accurate. If you are not sure, send an email to your client to verify the address before creating and sending out your invoices.
Incorrect details on the invoice Putting incomplete details on your invoices is one of the most common invoicing mistakes. If you do not detail the services or products that you are charging for itemizingyour client could end up confused or frustrated, and may delay or not pay the invoice at all.
Either way, both you and the client should be clear what the charges are for. Inconsistent invoicing Many small businesses and freelancing make this mistake: Instead of setting aside the first week for creating and sending out invoices, they do it whenever they have free time.
Often, they forget about it and have invoices backed up for months on end. This obviously impacts their cash flow negatively.
Set up a schedule to remind yourself to create and send out invoices. Even better, with online invoicing software such as InvoiceBerryyou can set up recurring invoices so that your invoices will be regularly sent to the same client for the same amount.
Online invoicing software such as InvoiceBerry will make your invoicing processes much easier Not following up on late payers The worst of the invoicing mistakes, this happens either out of forgetfulness or fear of confrontation.
Sometimes clients forget to pay. This is usually without intending to, because clients like all other business people get quite busy. In those situations, they may forget your mail under a pile of other important mail. In order to avoid this, be sure to follow up with your clients who are already late on payment.
This can lead them to challenging, delaying, or refusing to pay for your invoice. For bigger companies, your invoice can get lost in the accounts payable processes, which are set up to avoid fraudulent payments.
In order to avoid having your invoice labeled fraudulent, make your pricing policies clear before you agree to the job. Unprofessional invoices If you are sending out unprofessional, Excel- or Word-created invoices, your client may look on it as unprofessional.
Besides being a mark on your reputation, they also may just forget it—common for busy clients. Even worse, if your invoice has spelling and formatting errors, you may not get your invoice paid at all. To avoid that, you should proofread and use online invoicing software such as InvoiceBerry that helps you create beautiful, simple invoices quickly and easily.
Also, if you are setting long late payment terms, such as 30 or 45 days, your client may procrastinate on your bill. To avoid this, set payment terms for no later than 14 days.
That gives your client two weeks to pay. You should also have these policies clearly stated on your invoice, so that a client can have their questions answered right on the invoice. This will help clear up any confusion that may result and help you get paid faster.
No copies or digital backups Every invoice that you send should be backed up in one form or another.SIDEBAR: RECRUITING HORROR STORIES.
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