Cash flow refers to the money that comes in and out of an establishment. A positive cash flow means you have enough money to pay your bills and reinvest in your company, while a negative cash flow means you’re not gaining profit from your business.
In short, cash flow is an essential component of a business. That’s why business owners must strive to streamline their cash flow. One of the best ways to do this is through invoice software. Below are five ways invoice software can improve your business’ cash flow:
1. Invoice templates can speed up cash inflows
Cash flow consists of two components: inflow and outflow. Inflow refers to the cash your business receives, while outflow is the cash that your establishment spends. It can be for paying suppliers, wages, office premises and associated expenditure, tools, equipment and general expenses. So, what does this have to do with invoice software?
To start with, invoice software, like the one developed by Jobber, has been designed specifically to support businesses operating within the service industry, with improving cash flow. They offer a number of really useful features such as smart built-in templates. These templates have everything an invoice should have, such as the following:
- Business name
- Address
- Contact info
- Date issues
- Payment terms
Often, it can take quite a lot of time to manually create a single invoice, even hours, depending on its complexity. However, with a customized template, you simply have to fill in the information using the pre-determined prompts to ensure nothing gets forgotten. By looking to adopt more efficient software and resources to support in tasks such as this, you naturally become faster at routine tasks, allowing you to become more productive with your time spent.
2. Easily receive payments
When you start an business, one of the many things you have to consider is what types of payment you’ll accept from customers. Examples of your options include:
- Cash
- Credit or debit card
- Checks
- Mobile payments (e.g., Apple Pay, Google Pay)
- Online payments (e.g., PayPal, Stripe)
When choosing your payment options, as a general rule, the more options you make available to your customers, the better, as some customers may not have access to more common payment methods.
Invoicing software allows you to clearly indicate to your customers all the payment options they can choose from.
3. Customers are less likely to pay late
One of the keys to better cash flow is getting your clients to pay their invoices on time. This is one of the many struggles of business owners. Fortunately, there are several ways to address this, such as the following:
- Follow up with your customers
- Establish a ‘late payment fee’ policy
- Offer rewards for early payments
- Come to an agreement prior to job completion
With these tips, you should be able to minimize the likelihood of late payments. But then again, it can be difficult to implement these changes to your current payment scheme. Invoice software should be able to help a lot in this regard. For example, you can add some details to your invoice templates that explain a late payment penalty or early payment reward scheme.
4. Minimize invoicing errors
Invoicing errors can have a massive impact on cash flow. For example, if you miss just one zero on the total cost, clients can exploit that mistake. It’s also possible that you forget to add your payment terms or due date, which essentially enables customers to pay way over the supposed deadline. That’s why checking for errors must always be on your agenda.
Fortunately, much like most software nowadays, invoice software is capable of spotting red flags or errors in your invoices. This, in turn, ensures minimal hindrances to your cash flow.
5. You can pay your bills on time
Apart from improving cash inflow, you must also take steps to streamline your cash outflow. For your reference, cash outflow may pertain to the cash you spend paying suppliers, settling loans, and such. While it may not seem like it, it’s an essential part of cash flow.
For example, if you make late loan payments, your provider can pass on a penalty fee. Since this is not favorable, you want to avoid this at all costs. Therefore, cash outflow is as important as cash inflow. (4)
As you may have guessed, invoice software can help in this regard. To further clarify, invoice software can automate the process of paying suppliers and employees and paying loans.
Final words
Not all business owners are savvy when it comes to streamlining their cash flow, and this is a big, missed opportunity. If you can take advantage of this and adopt invoicing best practice, it stands you in a stronger position against your competition. Utilize the resources available to you and use them to give you a business advantage to grow and compete in the marketplace.
References
- “Invoicing basics – 5 essentials to include in your invoice template,” Source: https://www.freeagent.com/en/guides/invoicing/invoice-template-basics/
- “How to choose the best payment method for small businesses,” Source: https://quickbooks.intuit.com/r/payments/small-business-payment-methods/
- “How to Get Invoices Paid Quicker: 10 Fast Payment Tips for Small Business,” Source: https://www.freshbooks.com/hub/payments/get-invoices-paid-quicker
- “The Importance of Paying Your Bills on Time,” Source: https://www.bankadviser.com/bankingon/e_article003426068.cfm?x=b11,0,w#:~:
