Archive for March, 2009

 

15 Invoicing Tips for Rapid Cash Flow

Let’s be clear. In these recessionary times, large companies are paying even slower. Small companies may be struggling and paying slower than usual. Here are invoicing tricks you do have control over to achieve faster cash flow. These apply to invoicing for projects and materials used.

Invoicing tips for getting paid faster and achieving faster cash flow:

  1. Invoice immediately. Don’t wait till the end of the month or even the end of the week to invoice. Invoice the day the project is done or the item(s) are shipped. If you wait a week or two, that’s more time you’ll need to wait for the check.
  2. Invoice in progress payments. If you are providing a service that has definable portions, get agreement at the beginning of the project as to what project portions can be billed and the interim progress criteria.
  3. Determine if email invoicing would be better. Emailing an invoice is faster, harder to ignore, and easier to do after hours. But don’t automatically assume that email invoicing is the best choice for your client. Since most invoices arrive in the mail, the client already has a routine method of scheduling and managing their payment flow. If the client is a busy person with an assistant who writes the checks, sending an email is an extra step that may not be convenient for the client. Similarly, that type of client should never be handed an invoice in person either. It is too easy to misplace before it gets back to the bill payment desk.
  4. Have a due date, not just “due on receipt”. Use a due date on the invoice that is about 10-12 days from the mailing date. That way it will be due about 7-10 days from when it arrives in the mail. The client can then put the invoice in the file of items to be paid soon. In most cases, that would be at the next weekly payment cycle. Sadly, companies that pay in 30 days, or 45 days, will not adhere to your due date anyway.
  5. Detail your invoice. Write a detailed description of the items, service details and dates the invoice covers. Sometimes clients will dispute an invoice simply because they want to delay paying. Having a detailed account reminds the client of all the work you did and the items you delivered.
  6. Put the client’s phone number on the invoice. This actually increases the probability that you will get paid. Also, it saves you time if you have to call later to ask about payment. For larger companies include the Purchase Order number and the project manager’s name (your contact).
  7. Set payment terms at the start. Before you start the project or deliver the items, specify the payment terms. Most companies routinely have their own payment policy. Discussing it up front establishes you as a professional and helps ensure you get paid. It also sets the expectations. Some companies pay on the same day each week, on the same day each month, or simply 30, 45, or even 60 days after receipt. While you may not be able to alter the payment schedule, knowing it will help you plan better.
  8. Find out the prerequisites. Some companies require your EIN be on record; some require your insurance information. Others require there be a Purchase Order even if the person who purchased from you may not have clearly stated that. So when working for a larger company, find out who (specifically) handles payment. Double check the payment terms at the very start of the project so you can collect any needed documentation along the way. This speeds invoicing and eliminates reasons for slowing your payment.
  9. Try to get a deposit up front. If you have to buy materials specifically for a client which cannot be returned without cost, ask for partial payment to begin the project. This also verifies that the client is committed. If you haven’t already been doing this, it may seem harder than it is. It gets easier after you’ve been burned a couple times.  Being committed helps.
  10. Offer credit card payment. Even in larger companies, it may be a convenience to pay by credit card. Credit payments show up in your account often within 24 hours of payment.
  11. Pay attention to changes. Clients frequently change their product orders and project needs after the initial order has been started. Give them ongoing detailed reports of work progress on projects and items ordered or shipped. Having a clearly defined and documented change process up front will help you get paid when there are project or material changes.
  12. Build a document trail. Keep track of requested changes in writing. Be able to document anything the client asked for. Sounds cumbersome? Remember that the person writing the check may not be the same person who works with you on the project, but may have responsibility for payment accuracy. Help them out and help yourself get paid by creating and keeping the documents they’ll need.
  13. Send copies with past due dates. Make it a routine to send copies of invoices 25-30 days after the original invoice. It is possible for invoices to be genuinely misplaced. If clearly marked as “past due”, it may instill a bit of urgency if your client is a sole proprietor or small company. Statement copies can also look like your accounting system automatically sent it so your relationship is better preserved.
  14. Arrange for someone else to make collection calls. Have your assistant, accountant, spouse, business coach, or some other person call the client. People are embarrassed about not paying and having someone else call achieves several purposes. It preserves your relationship. It looks like you have a system, which you do. And it gets you paid when they simply need a friendly reminder.
  15. Use your Accounts Receivable reports. This report shows how many days payment has been due from each client. Use it as a trigger system by deciding how many days before you make the first friendly call, send a statement, or transfer to collections.

Adding these tips and tricks to your invoicing process may seem like a lot of work, but slow cash flow has much larger consequences!

Now stop reading about implementing invoicing tricks and start doing! Let’s create your personal profit strategies for growing profit. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at, 888-920-2030 or by email at merralee@captureprofits.com. 

“Seek new clients, seize better income, capture more profit”

Posted by Merra Lee Moffitt, CFP under Collect Cash Tags: , , ,  •  No Comments

Follow Up is Free and Profitable

It’s a recession. We’re cutting our advertising budget even though we know we shouldn’t. We’re racking our brains to see what else we can do to drive sales without spending too much. Well here’s a free sales and advertising tip. Follow up!

The National Sales Executive Association conducted a survey on how many sales you can get depending on how many times you contact your prospects. These statistics emphasize how important it is to follow up with sales persistence.

• 48% of sales people never follow up with a prospect
• 25% of sales people make a second contact and stop
• 12% of sales people only make three contacts and stop
• Only 10% of sales people make more than three contacts

But,

• 2% of sales are made on the first contact
• 3% of sales are made on the second contact
• 5% of sales are made on the third contact
• 10% of sales are made on the fourth contact
• 80% of sales are made on the fifth to twelfth contact

These statistics astound me and I spend a lot of calls and emails following up.  I confess that sometimes even I fail to follow up more than three times. So why do we not follow up enough?

• Too busy, didn’t get to call
• The person’s name did not make it to a “touch today” list
• The time allocated to make follow up calls got allocated elsewhere
• Don’t have a single “touch today” list, it’s in several places
• Don’t have a series of things to propose that seems appropriate
• Don’t know what to say, when you’re just “checking back”
• No follow up samples appropriate to this situation
• Want to build the relationship, but not sure how
• Haven’t tracked how many times already called, it’s too soon
• Haven’t set a follow up action, don’t know what to propose next

Your own personal list of follow up failure is probably some of these and more. With 90% of the sales made after the third contact, it’s clear that this is the result of a relationship being built. Relationships take time and repeated contacts.

But consider this. Calling is free! You already have a phone, a long distance plan, and extra cell phone minutes. So there is nothing else to pay. Email is free since you already have an email mechanism. A card is less than a dollar even with today’s postage. For a great set of follow up samples and follow up letters see: Free Sales Follow Up Letters.  So this kind of prospecting and following up is a real low-cost sales idea. That’s a great plus in this economy.

Persistence will make the difference in sales. Follow up calls are necessary and effective. If you’ve been at it more than a couple of years, you’d agree that it takes pigheaded discipline and determination to grow a business. This is a sentiment attributed to Chet Holmes, author of “The Ultimate Sales Machine” and perhaps anyone else committed to success.

So, I challenge you to make a list of people you haven’t followed up with and make some calls. Call me and tell me how it’s going. I’d love comments on more follow up samples from your experience.

Now stop reading about follow up samples and start doing! Let’s create your personal profit strategies for growing profit. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at, 888-920-2030 or by email at merralee@captureprofits.com.

“Seek new clients, seize better income, capture more profit”