Bizstartup.ie - NewsPutting the basics in place

Invoice of reason

Invoices are basic devices, but getting them right can help you get paid on time.

Clarity is essential in your invoice design. Keep yours free from unnecessary clutter and just concentrate on the basics:

• Customer’s company or business name 
• Customer order number/payment authorisation reference
• Invoice date
• Full product/service descriptions and prices
• Delivery date and method
• Total amount payable
• VAT number and VAT (if applicable)
• Payment terms
• Payment due date.

Spend time getting this right, especially all spelling and calculations, to avoid any confusion that may delay payment.

Make sure that you’ve got the address or email address right and invoice as early and as often you can. Invoicing once a month is now considered old-fashioned, and can restrict your cash flow.

Competent collections

Are you using all the options available to you to make sure that you are getting paid on time?

Your smaller or more trusted accounts may only need a letter, email or fax to remind them that their payments are due. Manage your correspondence tightly, though, to ensure that it is all up to date and professional.

If you need to hit home a sense of urgency with your payments, a simple phone call can be a very powerful tool. Take the initiative to call your customer and explain that payment is due. If you do this a week before the due date, your proactivity can encourage payment to be made, maintaining a good relationship.

Your next step could be to visit a customer who is running late on their payments. Keep the meeting civil and professional; your presence alone will show that you take timely payment very seriously.

Consider invoice discounting

If you need additional working capital and cash quickly, perhaps you should consider the benefits of invoice discounting compared with an increased overdraft.

Invoice discounting is the provision of finance against the security of an invoice, and is similar to factoring. The major difference from factoring is that your customer is unaware of the discounting facility and you are responsible for debtors’ ledger administration.

The advantages of invoice discounting are that:

• it generates immediate cash: this is particularly useful for growing companies
• it offers the flexibility to collect your own debts or use a collection agency
• you have the ability to maintain or control communication with your customers
• it is unseen and confidential: banks, credit rating agencies and customers need not know
• credit-checking services may be provided free by the discounter

If you need further help or advice with cash flow, credit, invoicing or any issue surrounding your companies finances, Sage offer a Credit Control online help service from as little as €70.  For further information, visit Sage Credit Control Advice Service.