Healthy cash flow is a direct result of an efficient online invoicing system. Effective invoicing can result in the shortened time frame between when a project is completed and when payment is received. An online invoicing system can also improve organizational efficiency, namely the amount of time an operations team spends organizing, sending and collecting invoices. To improve both customer relations and the timeliness of online invoice payments, consider the following 5 tips:
1. Check References – When establishing new relationships with customers, be sure to check references as this can help you to avoid late payments or non-payments. Provide a credit application for new customers to complete and consider completing a credit check, particularly for larger accounts. If you have concerns about a customer’s likelihood to complete payments on time, request a deposit upon receiving their orders.
2. Offer Online Invoice Flexibility – Not every customer’s online invoice system will work identically, and if your online invoice processes aren’t in alignment, it could delay payment. When accepting new customers, inquire as to what type of information is required on invoices (i.e. PO numbers, itemized breakdown of the order, description of the goods or services ordered, EIN number).
3. Promptly Invoice – Send online invoices upon completion of services or shipment of an order rather than billing at set intervals during the month. Even a slight delay in this process can result in extended customer payment cycles.
4. Establish Clear Payment Terms in Writing – Be sure that all customers are aware of your organization’s payment terms. Avoid generic terms on invoicing and rather opt for specific due dates and applicable discounts to make things easier for payors to decipher what options are available and what is expected in terms of payment delivery. You can establish these terms within your online invoicing software’s preferences to make things simple and easy.
5. Track, Track, Track – Document everything when it comes to your online billing practices and procedures. Keep track of all customer conversations, requested online invoice changes, late payments (an automatic alert system set at specific intervals is best), and payment receipt. This information will become critical in the event of a non-payment as you can provide record of your processes and lack of response to a collections agency or attorney. In addition, during an audit, your organization will make it easier for you to provide documentation as requested.
These 5 simple tips can help your organization to not only improve its online cash management practices, but its overall cash flow, which is essential to every business, regardless of size.