Cash flow is crucial to the running of a business and so it’s important that clients settle their invoices on time. If some of your customers are slow payers and you’re battling with your cash flow, then it’s time to take a look at the information you include on your invoices. Do your invoices encourage payment, are they specific? For example, an invoice that says: “payment due by 7th August 2009″ or “payment due in 30 days” is much better than saying “invoice payable upon receipt”. The latter is equivalent to saying “pay me when you’re ready”.
Some invoices also specify the aging of the account with little boxes saying “current”, “30 days”, “60 days”, “90 days”. Including this on the invoice can have a negative outcome as it lets your clients know that you are willing to serve as a creditor. It does however let clients know how overdue the account is and this may trigger payment from a few forgetful clients.
So be specific and eliminate any possibility of misunderstanding. This will help to get your cash flow back on track and money into your account!
Answer to yesterdays Saffa quiz: A homeless person.