Because cash flow is so important for the survival and longevity of any business of any size, it should be the number 1 priority.
Although profits and revenues are important overall, they are more geared towards the long run (promised income). Cash flow is important for the short-term (cash on hand) and allowing owners to meet their financial obligations.
In order to have positive cash flow, small business owners need to make sure their invoices are impeccable. That way, they’ll get paid on time and will have cash flow on hand.
So in order to make those perfect invoices, let’s look at the most common invoicing mistakes that small business owners often make, and how to avoid them.
Being slow with sending invoices
Of course, the most important thing is for small business owners to get their invoices out as soon as the products or services have been delivered.
Although this is a common sense idea, it often goes overlooked as many small business owners get caught up in the day-to-day operations of their work. This is one of the most common invoicing mistakes.
Business owners need to spend a lot of their energy on a lot of important tasks. Often once the goods or services are delivered, they may move on to the next important or urgent task and forget to send their invoices immediately.
This is a mistake. Their clients have their own accounts payable cycles, and if they miss the chance, their invoices may have to wait another 30 days.
In order to avoid that, small business owners need to make sure they send their invoices right on time.
Having the wrong details on the invoices
Another reason that invoices get delayed is that they are often filled out incorrectly.
What this means is that the information contained in the invoices is just wrong in some way. This could be the products or services, the dates, the hours, the quantities, or even the pricing for each.
It may even be discrepancies in taxes or already-paid amounts.
When a client receives this kind of invoice, it is disputed by their accounting department and is delayed until the small business owner sends a new one.
Don’t let this happen. Be sharp in what details are being included on the invoice and their accuracy. That way, you won’t have any delays or surprises for your clients.
Being too lenient with late-payers
The last point is that many small business owners are often too lenient when it comes to contacting clients to get their payment.
This happens a lot, and small business owners are reluctant to seem to pushy because they don’t want to lose their clients. This is one of the most understandable invoicing mistakes to make.
However, what happens is that the clients simply forget to pay and won’t remember on their own. They need to be reminded.
The small business owner simply needs to send a polite email reminder to the client asking if the products/service delivered was up to standard and when the payment will be sent.
That should be enough to get most clients to pay. However, if you don’t go after those late-payers, the invoice will be unpaid for a long time.
Avoid these invoicing mistakes
Don’t make these mistakes, and you will have positive cash flow to help your small business succeed.
If you follow these tips and avoid these invoicing mistakes, you’ll be much stronger in your financial capabilities.