Here is my one paragraph solution to improving the cash flow of a business overnight. Its simple, easy and costs almost nothing. So here it is…
the sun go down
on completed work without
an invoice going out.
It is a mantra that should be learnt and repeated often in the work place!
You might want to copy and past it into your word processor and print it out. I often do this for new clients with cash flow problems and put it in a picture frame prominently in their office. It’s all about shortening the billing cycle for businesses that generate work over a number of days, weeks or months. The quicker you get an invoice to a client the shorter the amount of time before the money is in the bank. Remember if its not in the mail its not a sale – meaning only when the money is in your bank can you consider the sales transaction truly complete.
Having trouble convincing your ‘professional staff’ from doing it? Well you only get what you reward so if your reward structures has an element of speed of invoicing once project work is complete then you’ll get the desired response from them.
Getting an invoice to the client sooner also sends a message that you expect payment on time. It also may send the message that you are ready for more if that is the kind of business relationship you have with them. It reduces the chance that clients complain about old work only just recently invoiced and the associated problems with ‘remembering’ the details, scope and instructions to undertake the work.
One client I helped recently in this area now includes an invoice with the reports (effectively the product) the company produces. In the past the invoice was sent separately days, weeks, months and sometime never! Most payments now come in around seven days after the client received their product.
Till next time!