4 Signs of a Bad Invoicing System & How to Improve It
You may be wondering how people can get invoicing wrong. It is relatively simple, and there are not many ways it can be messed up, right? However, the truth is that there are wrong ways to do invoicing. Some business owners may not even realise they are suffering from a flawed invoicing system, and they continue their business processes, wondering why things are just so hard.
With that in mind, if you are wondering what dictates a bad invoicing system and how you can improve yours, here are four signs to look out for:
1. Lack of communication
When you do not communicate your payment terms and invoices to your clients, they will not know what to do on their end. This can mean that your invoices do not get paid, and you also put yourself at high risk of arguments and disputes. To ensure this does not become a problem, always be clear to your clients about your terms and conditions regarding invoicing and payments. That way, when clients do business with you, they are well aware of what is expected of them so that no misunderstanding arises.
2. Taking too long to invoice
If you are taking too long to complete the invoice, remember that your customers will not be able to pay you. At the same time, the clients will also be slow when paying you back. For this reason, you must issue all your invoices on time and as quickly as possible. If there are certain circumstances that a client is working for you for a set period, issuing frequent invoices can also remind them to pay and even help you keep up your cash flow.
3. Not asking for upfront deposits
While you do not have to ask for upfront deposits, it is highly recommended that you do so, especially for large jobs. The reason you need to do this is so that you can gain enough money to cover some costs, such as labour and materials, to get started. Another reason is that you can reduce the likelihood of clients ending up not paying, causing a significant loss on your end. With that, always ensure that you request for upfront deposits, especially for big jobs. Pair this with progress invoices to get paid more frequently and on time!
4. Implementing payment terms that are too long
When your payment terms are too long, it takes longer for you to get money back, which can seriously interrupt your cash flow and hinder your operations. Keep your payment terms within a week, if possible, and set up a system where if a payment is overdue, the system will remind the client.
If you find that you fall into any of the categories above, now is your chance to improve it! Soon, you will find that your invoices are getting paid earlier and on time, ensuring that you enjoy plenty of cash flows while still carrying out your jobs.
To that end, if you are having trouble handling invoices, there are various accounting firms out there that can provide you with the services you need to keep invoices and more under control. Be sure to reach out to them, as their services will be well worth it, especially in the long run!
New Wave Accounting provides end-to-end bookkeeping and accounting services to help businesses grow. If you are looking for a small business accountant in Gold Coast to assist with your invoicing needs, contact us today to see how we can help!