Unless you’re CEO of The Salvation Army, chances are the most important reason you are going to work and opening the doors every day is to generate income. The income you earn is then transferred into a revenue stream, which then becomes cash flow, allowing you to pay creditors, which then trickles down in to profit and slowly winds up in a net profit position.
What are you doing within your business to hasten this process? One of our focuses this month is on the actual invoicing process – physically sitting down and typing out an invoice, sending it to the client and asking for money. Is there still a stigma in 2019 surrounding actually putting your businesses hand out and asking for money in return for the goods or service you have just provided? A lot of clients still find this process to be quite intimidating, especially in the small business arena, sub- $1,000,000 PA revenue market.
There are so many fantastic systems on the market at the moment that allow for simple, seamless invoice generation. They are inexpensive and almost all of them are “cloud based” which basically means instead of having 1 computer that all data is saved on eg: the home office computer – the data is saved in an online cloud via the internet. This data is updated instantly, giving anyone with access to that invoicing system the ability to see what is being generated. You could be in Tokyo and be able to approve, edit, send or respond to an invoice that has just been created by your admin team back in Australia within minutes.
What has triggered this thought process? I recently dropped my car in for a scheduled service at the local mechanic, I know who they are just from living in the same suburb – but we’ve never done business. The owner of the business offered to leave the car out once complete, so that I could pick it up after hours, after I’d finished my regular days work – which was a nice gesture.
A couple of weeks passed and I thought to myself “I actually haven’t received an invoice from him” – being that I know him and he is just a small business (4 staff) I phoned the workshop to ask if I could pay the bill. Another employee answered, I explained that Phil had done some work on my car and that I wanted to fix him up for it. “Ah sure no problem – what was your registration number?” A minute or so went by, before he came back to the phone. “Hi are you there? Phil hasn’t done a job card for that yet – once we do it I will email the invoice out to you, is that ok?”
Ok? But, I was stunned. The work was completed 2 weeks ago and it hasn’t even been itemised before being invoiced yet? So now Phil has approx $700 missing that should be sitting in his bank account instead of mine. Heres what should’ve happened:
1/ Work completed as per client instructions / vehicle service checklist
2/ Invoice for works generated via Accounting program
3/ Invoice placed inside vehicle for client to have when picking up the vehicle (if already a client and credit application completed) If not – payment should always be made prior to the goods leaving your business (in this case, the car). The client (me) would’ve ideally filled in their customer details before the work was commenced. Name, phone, email & address if applicable. Upload those details straight into your accounting program as a new client. Once the invoice is generated, you can now invoice them directly so they also have a copy, which clearly shows your details, the amount being charged and payment terms offered (if any).
Before the end of the year and the start of a new decade, take some time to have a serious think about what your business is doing to get money in the till every day, in the most effective and timely way. Where could you make some small changes to improve the process for both you and the customer? Of course, we are always happy to sit down and chat through some tips for increasing your cash flow! Give us a call on 1800 334 345. 👍🏼