Cash Manager Limited: Invoicing for Startups: 6 Top Tips

April 16, 2015

Invoicing for Startups: 6 Top Tips

Invoices are the lifeblood of any small business, and getting them right is imperative in order to secure steady cash flow from day 1. Inputting invoice details into a piece of small business accounts software is a great way to keep on top of unpaid bills, but for small businesses and startups even getting the them out of the door in the first place can be a challenge. Here are a few handy invoicing tips to help you get started:

1 – Email Every Invoice

Emailing invoices is not only good housekeeping, it also helps you when chasing up late payment. Send every invoice you raise to the client with an email tracker – that way you can monitor receipt and whether or not they have viewed the document. This may sound extreme and will only apply to a minority of clients, but it will give you a firm leg to stand on when chasing a late payment.

2 – Cover Yourself For Late Payment

Late payment of invoices can grind small businesses to a halt, especially if – as is often the case – the guilty party is a big-spending large corporation. Invoices are paid on average two weeks late, so factor this in when setting payment deadlines. If you generally set a 4 week deadline for payment but are being stung by clients regularly paying late, why not half that deadline to 2 weeks? It’s not an unreasonable deadline and won’t do your cashflow any harm whatsoever. You can then use your small business accounts software to track payment and monitor your cash flow.

3 – Build An Invoicing Schedule

This is especially important if you have lots of clients on monthly retainers. Agree a monthly interval that suits both you and the client and generate the invoices accordingly using small business accounts software. Be wary if your client insists on a longer payment period – this can be indicative of underlying cash flow issues which is a warning sign for unreliable payment.

4 – Know Your Tax Laws

In the UK, if not all, the vast majority of the invoices you send out will be subject to VAT. If it is a Business to Business transaction, the payee can deduct the VAT at a later date, but make sure you know your VAT code and include it on every invoice. Not doing so is bad practice, and can land you in hot water in the long run. Small business accounts software is a valuable tool if you are new to raising invoices but aren’t clear on tax law.

5 – Don’t Be Afraid To Chase

A lot of this post has focused on how to deal with late payment. While the majority of your customers will pay on time, it only takes one late payment to decimate a startup’s cash flow. Chasing up payment can be daunting, especially when dealing with a large company that dwarfs your own business. At the end of the day however, if you have provided a service and a client – big or small – hasn’t paid for it, it is only them in the wrong. Don’t be afraid to chase the payment. A little persistence never hurt anyone.

6 – Keep It Simple

Finally and above all else, make sure it’s easy for your clients to pay you! Nobody really likes spending money, and if you make it difficult for your customers to do so they are unlikely to go out of their way for you. Therefore, make sure payment is easy. For small ticket items, why not make it an option to pay via PayPal? Most people have it, and all it takes is a couple of clicks. When invoicing for big-ticket items, ensure the cash amount is clear and unambiguous, and your company account details obvious.

Want To Know More?

The best way to keep on top of your business invoices is by investing in a piece of small business accounts software to help you track, manage and monitor your payments. Download Cash Manager’s Comprehensive Guide to Small Business Accounting Systems today!

Click on the image below to download Cash Manager‘s simple accounting software today.