Here at Saasu we believe that cashflow is the number one thing you need to take care of in business, so you can sleep well at night, love what you do and expand your life.
To welcome the new year, we want to share four simple tweaks you can apply to what you’re already doing around invoicing and processes, which will deliver noticeable improvements to your bottom line.
These simple moves, often overlooked, are designed to make a quick impact on how you start 2016. The best thing, they won’t cost you a cent and they’re a great way to use this break productively.
1. Create a cashflow ritual.
It’s human nature to avoid score boards (scales, bank balances, etc.). It allows us to keep ‘busy’, dig our head in the sand, doing what’s easy and comfortable, instead of what we know we need to do. It’s important to learn to love the dashboards of life, especially financial ones in business. Creating rituals, cashflow in this case, helps with this love affair.
Start your week by reviewing what you owe, who owes you, how much work is in the pipeline and how much cash you will have for the month ahead as a result. Then list out the outcomes you need to achieve to get you where you need to be and the actions you need to take to make them happen (chasing payments, closing contracts, making more sales, etc.). This will help you focus, get out of your head and work out what to do next.
Saasu users can use Forecaster to make this happen easily. It only takes a few seconds to show you your full position. If you stick with the ritual, you will see the results.
2. Anonymise your invoicing and debt collection with one simple move.
Create a separate, generic email address for all billing and debt collection correspondence (e.g. accounts@XYZbusiness.com), even if you’re a one or two person business. This helps separate you from the billing process itself, especially if you deal with clients directly or have another prominent role in your business that you don’t want to mix up with the painful job of chasing payments.
We’ve all been in the uncomfortable position of needing a customer to make a payment but not wanting to come across as needy or unprofessional. We want the customer to keep coming back and look like we have it all handled, so there is a natural fear that chasing debt will create pressure and strain the relationship. This is why it’s important to keep things separate.
By having a separate billing identity, you can create a virtual department at no cost, which can help bring you the cash you need on time, segment your workload and undoubtedly give you more peace of mind. If you’re a smaller business without someone specifically assigned with this responsibility, you can even go as far as hiring a virtual assistant to help you with this area of the business (if hiring someone locally isn’t on your budget).
Also use a neutral, business tone on all correspondence regarding billing, separate from your personal relationship with your client. This helps make things easier, should any issues arise later.
3. Use four elements to get your invoices to the top of your customer’s payment list.
This is an area that is often overlooked, but communication is key. How you word an invoice and the email that goes with it, can be the difference between getting paid on time and being ignored.
Here are the components you must include on your invoices to increase the chances of receiving a timely payment:
A clear deadline for payment
Clear means specific (the actual date instead of generic wording, e.g.’within 30 days’), prominently displayed on the invoice, and clearly repeated on the email you send it with.
More than one payment option
If possible, include more than one payment option, and make it clearly visible on the invoice. Create one section specifically for payment options so they stand out. The easier these options are for the customer, the better. For example, credit card payment options are quite successful for most Saasu users, but add the ones that make sense for your business.
A clear consequence for late payment
This is super important, and perhaps one of the most effective steps you can put in place. To serve your customers effectively, you need cashflow, therefore, it’s only fair to have clear consequences in place to influence them to pay on time and create a relationship of trust and respect around billing.
The application of a consequence is a proven way to create compliance in human beings. The book Influence: Science and Practice, by Robert Cialdini is one of the best resources available on the subject, and perhaps one of the best business resources out there.
These consequences can range between the loss of a specific privilege, such as locking access to your product or service, a monetary penalty for late payments, the late delivery of a service or the use of debt collection agencies (whatever makes sense for your business).
To do this effectively, make sure you give your customers plenty of warning, and setup reminders so they don’t miss them. Be flexible and fair, but firm and consistent too. The key to getting this right is the wording, process and delivery. Automated, preferably.
The application of consequences can be used throughout your business processes, including sales, to create results, but we will leave this for another post.
A request for immediate contact regarding late payments
Some customers will have trouble paying on time, that’s just reality. By requesting upfront that they communicate immediately if they are unable to meet the deadline, you will be able to plan for cashflow shortfalls and negotiate new deadlines, part-payments or other options that will give your client a breather but still keep them accountable for the new commitment they make. The science behind this is also explained in Cialdini’s book.
4. Create a simple process that can be automated and repeated as much as possible without your input.
It doesn’t take much to create a simple process for invoicing and debt collection that can start giving you better results from word go. If you’re a Saasu user, you have all the tools right now to make it happen. If you’re not, there are ways to do it with a few extra steps. Your process should include the following:
- A set time in the sales cycle for invoicing – this means you always invoice at the same time, be it at the time of sale, on completion of a particular stage or delivery of a particular service. This will be different for each business and industry, so you have to choose what makes sense for you.
- Set specific invoice and email templates you reuse every time you bill a client, including different ones for overdue bills.
- Automate reminders to be sent in particular intervals for unpaid invoices, including final notifications for past-due invoices before enforcing a consequence (for example, initial invoice sent on day 1, first reminder sent 5 days after, and so on).
- Create a sub-process to handle the worst offenders. This could be a mix of phone call, final warning, sending to a debt collection agency, etc.. It could also include firing your top 5 repeat offenders as clients after considering whether the strain on your cashflow, resources and energy are worth the hassle of working with them.
Saasu users can implement the process above using a combination of Templates and Automated Statements engine. Otherwise, you can use your current email system (including calendar) and word processor to achieve similar result.
Every area of your business can improve massively with small, incremental improvements. The key is to keep it simple and doable. If cashflow is the only area you target and get better results at, you’re on your way to a great 2016.
Here’s to new beginnings. In business and in life.