As a small business owner, chances are making money was high on your priority list. To accomplish this goal, a consistent inflow of cash, aka positive cash flow is required. Invoicing is one of the most basic building blocks in cash flow management. Why? Because without the cash, there is simply no management involved. Establishing a scalable and sustainable way to get paid sets the tone for healthy accounts receivable practices. With the loads of financial management software out in the world, getting paid has never been easier.
Let’s dig into three basic tips for invoicing to get you started on the right track for cash flow success.
Managing your cash flow is vital to being a business owner. Regardless of the industry you’re in, it’s important to be upfront and clear on payment terms when beginning relationships with new clients and customers. These terms outline when and how you expect to be paid by your client in exchange for your products or services.
Keep your business healthy and ensure you get paid on time by setting expectations early and following through. It is important to have these terms laid out clearly in a contract. It is also not unheard of to require keeping a card on file to collect payment automatically each month, especially if your services are a consistent amount each month. Having clear terms and expectations outlined also supports any disputes, should you not get paid as agreed.
To simplify your invoice process, we suggest you take advantage of invoicing systems that help you get paid promptly. While there are plenty of great options available, we recommend QuickBooks Online to a lot of our clients. It’s easy to use and helps you automate the process so you can focus on what’s most important—your business. Clients can pay you directly from the invoice, like a bank transfer or credit card.
You’d be surprised how many businesses get behind on this vital task, just because they are not prioritizing sending invoices for the work they have done.
Consistent invoicing is a must for small business cash flow. Establishing an accurate, reliable process that makes this easier for you has to become a priority.
Work with your accountant to figure out whether you need to add sales tax to your invoices. Depending on the work you do and the state you do business in, your tax obligations will vary. If you neglect to charge your clients and customers for sales tax, it can be an expensive mistake come tax season.
We could go on all day with tips for invoicing. Using these three basics in your practices will help you avoid basic cash flow issues. Set the expectations with your clients, execute a consistent process to get paid, and ensure tax compliance so that surprise payments don’t eat into that cash on hand. If business is flowing and invoicing is just not your thing, we are happy to help take that piece off your plate and support your success long-term.
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