Did you know that if you aren’t paid within 30 days of delivering your service, the chances of ever seeing that money drops significantly?
Aged and unpaid invoices can threaten the life of your business and unfortunately, many trade businesses fail to collect money owed, and end up on life support because they fall victim to the same three fatal mistakes:
- 1They believe if they deliver a good service, then the client will automatically pay the bill: If you don’t have a strong payable policy that defines the terms of payment for every sale, and if that policy is not clearly communicated to the client, then it doesn’t matter how great the service is! You could still end up having a large pile of invoices that may or may not, ever get paid.
- 2They believe the customer knows how much is owed for the job/project and will pay the bill promptly: Only an invoice triggers the payment cycle. The client has no obligation to pay the bill until the invoice is received, if that invoice does not contain complete and accurate information, and if it is not sent to the client on a timely basis, then there is no guarantee that the client will pay the right amount at the right time. If the invoice goes out days, weeks, or months after the project is finished, then guess when payment will be received? Days, weeks or months later than it should be!
- 3They forget to invoice: This is way too common. There must be some seriously passionate trade business owners out there who are so generous, that they’re willing to do their work for FREE! Trade business owners find themselves running around flat out trying to manage their business and focus on securing more work… and they literally forget to invoice… but if you are ‘too busy’ to invoice, you need to seriously reconsider what is a high priority in your business.
Invoicing should be done at the click of a button, and NOT be some annoying task that gets put on the back burner every week – shouldn’t it be the best part of the job? Collecting the money??
If your invoicing is complicated, then you need to think about how you’re quoting your jobs!
It doesn’t matter how many sales you make, and it doesn’t matter how much profit you have on paper, if you aren’t collecting money from your clients, that money will never hit your pocket and you will run into cash-flow problems.
The faster you invoice, the more likely you are to get paid. If you put it off, you are literally pushing back your payday!
Data from Xero tells us that when you invoice the same day that the job is completed, you are almost 50% more likely to get paid.
When you invoice late, whatever the reason may be, it tends to stir up more confusion than an invoice made on time. You have to request payment while the job is still fresh in everyone’s mind… If you leave it too late, people forget certain conversations, or reasons behind certain activities, they want to negotiate the pricing, not even pay at and all those kinds of dramas.
Most trade business owners don’t have a payable policy, or collections policy and many of those that do struggle to communicate it effectively to staff, suppliers, and customers.
Also, they don’t invoice the same day they complete work for a client. Customers are not going to look out for the health of your businesses cash flow. That’s your job!
You need to be invoicing on time, every time.
If you're looking for assistance with anything to do with invoicing and financial management, click here to learn more about how our team can help!