Cash flow is the lifeblood of any business, and regular, reliable, and timely payments from clients are key to maintaining healthy cash flow.
However, to achieve healthy cash flow, businesses must have efficient invoicing systems and accounts receivable processes in place. For small and medium-sized enterprises (SMEs) with limited resources, this can pose a significant challenge.
That’s why we’ve compiled 12 strategies to help streamline your invoicing process.
A Guide to Streamlining Your Invoicing Process
1. Automate Your Invoicing System
Technology has revolutionised business and continues to do so. Fortunately, this includes invoicing processes. A wide range of invoicing and accounting software is now available, enabling SMEs to automate the creation and sending of invoices.
Not only does this save time, allowing you to focus on other aspects of your business operations, but it also reduces manual errors and ensures timely invoice issuing.
2. Standardise Invoice Templates
Creating a standard and consistent invoice template achieves multiple objectives: It ensures all necessary details – such as your business name, contact information, payment terms, and itemised products or services – are included. Secondly, consistency enables clients to instantly recognise your business’s invoices, reducing any potential confusion. Lastly, it enhances your company’s professional image and reinforces the importance of timely payments from your clients.
3. Set Clear Payment Terms
Historically, 30 days was the standard payment term for businesses. However, with the advent of automated invoicing software, this standard has significantly shortened, with some businesses now offering payment terms of just two weeks.
Of course, you can determine the right payment terms to suit your business’s needs and to develop strong, healthy relationships with clients. Regardless of the terms you set, ensure they are clearly defined on each invoice, including customised due dates for clarity, early discounts to encourage prompt payment, and any applicable late fees.
Setting expectations clearly for your clients will encourage timely payment and help streamline the overall process.
4. Send Invoices Promptly
This strategy is important and under-utilised. When services are provided or goods delivered, make sure to send out your invoices as soon as possible. Not only does this mean that the sooner you send it the sooner you can expect payment, but it also reflects well on your business as it indicates seamless processes, efficiency and sets a standard.
5. Use Online Payment Options
To best streamline your invoicing processes, integrate online payment solutions into the system. This makes it quick, convenient, and easy for clients to pay. The less time it takes for them to settle their accounts, the faster you are likely to receive payments.
6. Follow Up on Unpaid Invoices
Following up on unpaid invoices can be a drain on the already-limited resources of an SME. However, implementing a strong follow-up system is necessary. Gentle, professional and polite reminders can prompt clients to make payments if they have forgotten.
Fortunately, this can be largely automated when you use accounts receivable software.
7. Offer Discounts for Early Payments
While we mentioned this tip earlier, it is important enough to highlight as its own strategy. Charging late fees can help deter clients from making late payments. However, as the saying goes, you catch more flies with honey than vinegar.
Offering discounts for early settlements can encourage prompt payment. Not only does this improve your cash flow, but it also helps to build goodwill with your clients.
8. Maintain Accurate Records
Once again, invoicing software and technology are making this process increasingly easier, but keeping meticulous records of your invoices – created, sent, received, and settled – is still critical.
Well organised and filed records are not just important for taxation purposes, it will help you track payments, identify discrepancies or outstanding accounts, and analyse your business’s cash flow/financial health.
9. Train Your Team
For SMEs, having a dedicated accounts receivable department is not always feasible. While it is likely that an administrative team member will handle most of the invoicing process, it’s essential that all relevant team members are trained in best practices, your invoicing procedures, and the software used.
This promotes more operational efficiency, provides contingency in the event of someone’s absence so cash flow is not disrupted, and allows clients to always have access to a member of the team should they need assistance settling an account.
10. Review Your Invoice Process Regularly
Every business is unique and every business has different needs. So customise these invoicing process strategies and periodically review them to ensure that any inefficiencies are ironed out.
A commitment to continuous improvement will ensure as smooth and seamless an invoicing procedure as possible.
11. Communicate with Clients
Communication is key. Maintaining open communication with clients for invoice queries helps build rapport and trust while addressing potential issues promptly to prevent payment delays.
12. Explore Invoice Finance
Invoice Finance is a financial solution that brings tomorrow’s payments into your business today. By unlocking the funds tied up in your unpaid invoices, you can access a cash advance to better manage cash flow, reduce cost-related pressures, and support ongoing business growth.
Find out more about Invoice Finance with ScotPac
With ScotPac, you can access tailored financial solutions to transform your outstanding client invoices into a readily available source of funding.
Our lending specialists bring over 35 years of experience, support more than 8,500 businesses, and fund $23.9 billion worth of invoices annually. Most importantly, we see our clients as partners, not transactions, ensuring that every financial solution is customised to meet their unique needs and business objectives.
If you’d like to learn more about how our financial solutions, including Invoice Finance, can help you manage cash flow—or if you’d like to discuss strategies for streamlining your invoicing processes—submit an enquiry below or call the ScotPac team today.
