Getting cash into your business is a two-step process that may seem easy, but actually determines whether you have a business or not. Getting cash into your businesses bank account is your business. My business partner, Frank Restuccia, has a saying when it comes to invoicing and collecting money in a business and it goes by the simple acronym: “ABC”
● “Always Be Collecting”
Frank ran our previous business really tightly, we had no money for the early years which led to him creating some great techniques and ways to invoice and collect money. So, here’s some key insights and tips we’ve taken into our new business to get cash through the door.
Key invoicing tips
● Make your invoice simple to read and highlight the crucial information, such as:
- When is the invoice due
- How much its for: break it down by line item and have a total amount due.
- What the invoice is for: be specific.
- How to pay it: If you accept EFT put your Bank name, BSB and Account details
- Whether you charge G.S.T – ensure your ABN is visible.
- Here is a great little template
● Backup your invoices – either use an online tool or back it up in a separate folder. Going back in time for client requests or for tax purposes is crucial. We keep a log of all the invoices in a spreadsheet so you can get a quick overview.
● Title your invoices with quote numbers – ensure you have the matching quote that applies to a specific invoice. If things go strange or you get questions about an invoice its crucial that you or someone in your company can reference a quote document when explaining what a charge is for. This is crucial if there is a dispute or worse if things get a bit legal. This also makes it a lot easier to know if you have billed for a project or not and how much is left to bill.
- Freshbooks is a great piece of software for managing your accounting and invoicing online.
- Ballpark for quotes- a great way to do quotes and it snaps straight into freshbooks.
- Saasu – This is a little more feature rich and might be better suited to slightly larger small businesses, it does inventory management aswell.
- Xero – Web based system for invoicing/billing, accounts payable, bank reconciliation and bookkeeping.
- Live Accounts from MYOB – this is a new piece of software that I havent personally trialed yet but looks interesting for self-employed, sole-traders and startups.
Tips for Collecting money
- Collect everyday – Collecting money shouldn’t just be done monthly but everyday. When you are dealing with a client always have a clear idea of where their payments are up to before providing more services or products.
- Never apologise when collecting money. You deserve that money, you shouldnt have to apologise for collecting it. Remove the word “Sorry” from your dialogue. Instead ask “Just wondering when invoice #777 for the gardening work will be paid?”
- Get a specific date as to when an invoice will be paid. Its really hard to brush off this question and this gives you a definitive time as to when you will receive the money.
- Suggested Dialogue: “When is the expected pay date for this invoice?”, if they say “Next week”. Reply with “Just so I am clear, what’s the date of payment? 10th of August?”
- Ensure the client has the payment details – Check that the client has the correct payment details and that they can pay with the method of payment suggested.
Quick payment methods tips:
- Agree on a payment method upfront. Credit cards may charge you a fee but may help you out if your customers don’t have the money immediately. Banking transfers are great for business invoices but are a little messier when it comes to consumer transactions.
- Protect yourself with risky transactions. You can protect yourself using Paypal as opposed to using other methods that can be easily reversed or gazumped.
Tools:
- Paypal – This is easy to setup and a lot of people understand how to use it because its the favoured system of eBay
- Freshbooks also handles online invoicing and can allow your clients to pay online.
- Mobile Payment Systems – There are a few new systems that transfer your mobile into a credit card processor: ICCPay and Square.
