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When you need funds, you have to think of ways you’re going to find the money. And when you dig a little deeper into your accounts, you could be surprised by the amount of money available to be recovered in payments due. Sound management of your invoicing is an excellent way of ensuring you have the funds you need when you need them. How do you go about having a cash management system that will be clear and efficient for you and your clients? Check out these 6 tips for efficiently managing your business.
Set limits on free products and services
Do you provide free products and services? When you're trying to land a contract, you always offer some free services such as recommendations, tips, advice and action plans. But make sure you know exactly when you'll start invoicing for your services. Once customers sign on, tell them that all future services will be billed, including after-sales service! Some new entrepreneurs aren't comfortable talking about what their products and services cost. But if you talk price from the outset, there will be no misunderstanding or room for negotiation when you send the bill.
Check the creditworthiness of new customers
Getting paid on time is especially important during the start-up and growth phase. If you receive big orders from new customers that intend to pay later, run credit checks to ascertain their payment histories. If you have any concerns, consider asking for a deposit or down payment.
Ask for a down payment
A down payment is something you and your customer agree on after signing the proposal. Include the amount of the down payment in your quote and follow the same rules for all customers. This will make discussions easier and simplify the contract and invoice management process. For professional fees, it is common to ask for anywhere from 20% to 50% of the total fee up front and the balance when the work is complete. With this approach, you know the customer is serious and you eliminate any concerns you may have about starting the project. It also helps you pay for any upfront costs, such as materials.
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