4 Tips To Manage Invoices And Improve Cash Flow

The ability to manage invoices and maintain a steady cash flow can be a juggling act for businesses of all sizes. Sales can be through the roof, but the aging period on invoices can have revenue trickling in at a slow pace. At the same time, businesses have payroll and other expenses, which can place a severe strain on cash flow if payment on invoices is not fast enough to exceed the cost of running the business. We have compiled a short list of tips any business can use in order to manage invoices and improve cash flow.

Manage invoices with down payments

Every business wants to be “customer friendly,” and sometimes think it is “too forward” to ask customers to make a deposit on their orders. The truth is, it is more of a standard practice than anything. Requesting a down payments gives businesses the revenue needed to cover at least part of the cost of the order, while also ensuring that customers pay the remaining balance, which makes it easier to manage invoices. Most customers are likely to pay off an existing balance when they already have an investment in their orders. As an optional measure (depending on the size and price attached to the request), some businesses require a second payment when the order is partially completed.

Improving cash flow with consumer financing

Consumer financing is a great source of revenue from customers. Instead of having customers pay the total cost upfront, consumer financing spreads out the cost over monthly installments, making payments more manageable. This improves the overall cash flow while also being able to manage invoices because the company providing the consumer financing handles things like reminders and ensuring payments are made.

Late fees

No one wants to pay more than they have to for anything. By stating clearly before a sale is finalize, as well as on the invoice, that there will be additional charges for late payments – customers will have an incentive to remit payment in a timely manner. Between late fees and down payments, customers are more likely to pay in full, rather than have their invoices sent to a collection agency and have their credit scores negatively impacted.

Invoice factoring

Invoice factoring is way to kill two birds with one stone. Invoice factoring involves selling unpaid customer invoices to a commercial finance company in exchange for immediate capital. Once sold, the invoices become the responsibility of the finance company, and it is up to them to get payment from customers. In the meantime, your business gets fast cash, and improved cash flow, and it is relieved of the headache of trying to manage invoices. Invoice factoring is fast and easy to set up, and the ability to collect immediately on customer invoices is a lot more attractive than waiting for eventual payments at the end of the aging period.


Related Posts