Optimizing Cash Flow#2-Invoicing

Intro: Cash Flow Cycle Explained | 1. Onboarding | 2. Invoicing | 3. Vendors | 4. Metrics | 5. Accounts Receivable Problems

Welcome to part 2 of Optimizing Cash Flow for Small Business, I’m David Worrell from FUSE Financial Partners and we’re giving you some tips to make sure your cash flow keeps moving in the right direction and keeps the business humming forward.

Today, we’re talking about invoicing and the proper form, function and follow up to use when you send an invoice to a customer. I’ve got six or seven tips for you, in the next few minutes, so let’s jump right in.

  1. First, when you send an invoice to a new customer for the first time, don’t forget that it’s not the only thing you need to send. You need to also send them a W-9 that includes your Federal Employer Identification number. That’s an EIN. Every client will need to have that information to pay you and stay compliant with their own tax policy, so don’t forget to send that right along with the invoice.
  2. Second, on the invoice form there are some important things that need to be listed. For example, the ACH information your customer will need, to pay you. Lots of large companies only make payments to their vendors via ACH, so it’s important to include your bank routing and account numbers at the bottom of the invoice so that they have what they need to do that properly. 
  3. Consider Click-to-Pay. If you’re using QuickBooks online or desktop, they offer a built-in click-to-pay system. You activate it by asking Intuit to turn it on. Then, when you email an invoice, your customer sees an icon on the screen they can click through, enter their credit card or bank account information and your invoice gets paid instantly. The money lands in your bank a couple of days later. You never have to futz around with a paper check or walking across the street to the bank to make the deposit. It’s really a super way. It costs very little. Everybody should have a click to pay solution on their invoices.
  4. The invoice should have both the payment terms and the penalties if they don’t pay within those terms. By terms, I mean whatever your standard payment terms are; 30 days, 45 days, etc. Put them on the invoice and include the penalty if they go beyond those terms. Let them know that you’re going to charge interest or a late payment fee. 
  5. Finally, we come to the follow-up.  It’s important that when you send an invoice, you follow up three times.  The first is in the first three days. You want to know that they received the invoice, that it got to the Accounts Payable people and that it’s been entered for payment. Just give them a friendly call and say “hey, we haven’t been sending you invoices lately, I wanted to make sure the right person has it and that they are still at that desk,” all those things.  Be friendly about it. In two weeks, call back and say “hey, I wondered if you could tell me what the schedule is to pay my invoice, so that I know that you’re managing your cash flow and you’re looking after these things.  It’ll put a little reminder in their head to pay that on time and hopefully they’ll be able to give you that schedule.

If they still haven’t paid after thirty days, I want you to call them back a third time. By this time, you might have to be a bit more firm with them. You were expecting payment last week. The payment hasn’t arrived. If necessary, you may have to cut the off from your services. “We will no longer be able to ship to you; will no longer come out and provide services to you,” etc.

Call them 3 times. Make sure your form has all the right information in it and if you do these things, the customers will respond and then respond with their dollars. You’ll get the cash in the door and that’s making your cash flow in the right direction.  

Join us again next time for more tips about how to optimize your cash flow.

I’m David Worrell from Fuse Financial Partners. Thanks for joining me.

Intro: Cash Flow Cycle Explained | 1. Onboarding | 2. Invoicing | 3. Vendors | 4. Metrics | 5. Accounts Receivable Problems

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FUSE financial partners

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Charlotte, NC 28217
United States

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