Small Business Talk
The Podcast to Grow your Business Faster
Tips To Stay On Top Of Your Small Business Invoices & Expenses And Why This Will Save You Money.
Show Notes
Tips To Stay On Top Of Your Small Business Invoices & Expenses And Why This Will Save You Money.
Today, we’re talking to Donna Vincent. Donna is from Solo Accounts and will be talking about tips to stay on top of your small business invoice & expenses and why this will save you money.
Cash flow, invoicing, expenses is something we all don’t like to think about, but of course if we don’t have any money running into our business, we just have a very expensive hobby.
We’re under no illusion that this is everybody’s least favourite job in running a business, and quite often, they can’t see the value in keeping this up-to-date, that kind of thing, they could be using their time better, making money in their business. By keeping up-to-date, and on top of this, you can actually use the information to better run your business and make it more efficient. But the first thing I would suggest is to use a system that best fits your capabilities in your business. So if you’re not experienced in bookkeeping and your business is only quite small, using a pencil and paper is fine. Probably not efficient, given what technology can produce for you, but you have to understand what you’re doing. So if you’re spending a whole pile of time entering income and expenses, and you don’t understand the output, it is of no use to you, so find a system that suits you. Or, get some training or get some help. So that’s the first thing I would say.
Understand What You're Trying To Achieve
Then you’ll do it right and it takes away the fear of the consequences of not doing this work. What you want to do is get information that will help you understand the costs and the profitability in your business. You may have to use the information to get finances from a bank. You can use it to negotiate better prices, or do some financial planning, and it does help you to manage your cash flow. Understanding that there are benefits helps, and also understanding that there are consequences if you don’t do it. If you’re not invoicing people, and you’re not collecting your money, you might be missing out on being able to use that money to get discounted specials for your business. You could be being charged interest because you’re having to use your own money in your business. You could be being charged like, fees, because you don’t have the cash coming in, not because you’re not getting business, because you’re just not collecting your money. If you can understand that there are consequences for not keeping on top of this, you might change your mind set on actually doing the work.
That’s where people go wrong. They get all excited, especially as creatives, they get all started about doing the work and getting the results and everything, but then when it comes to money, it’s that sore subject that you’ve got to send the invoices out, and I must admit the first thing I asked my business, was to bring in a part-time bookkeeper and she gives me right on task and says, “Right, you’ve done this work, where’s the invoice? Where’re they paid?” And keeping on top of it, it’s much easier to chase people for money too. It’s very difficult to go back in and ask people for money six, 12 months later. Whereas if it’s only a few weeks or a month, I bet you it’s much easier to get.
Don’t Be Afraid To Chase Up Invoices
It’s important for people to understand that sometimes your customers are waiting for a phone call to remind them. That they’re not paying it because they don’t want to, they just get busy and they just need a reminder. Don’t be embarrassed or intimidated about ringing your clients, because sometimes they want that phone call, and it is easier to collect money closer to the time than, as you say, six months later. Be brave, you know, you don’t work for… You don’t want to do all that work for nothing. Make a phone call and, once again, if you are not the type of person that can do it, outsource it. Find a friend that has a very nice way of ringing people and asking for money.
Yes, definitely, I really like it when clients ask me for my invoicing which doesn’t happen quite as much these days because I can say my bookkeeper is on it. But it also helps their cash flow too. If they’re expecting to have to pay your bill within that month, and it doesn’t come, then unfortunately people spend the money, and then the next month they don’t actually have it. Its quite important to keep on top of it.
Invoice As Soon As You Can
And one thing people think to do, is to invoice immediately. Some people will leave it till the end of the month. So, if you finished the work on the second of the month, and then you wait till the end of the month to invoice, you know, you’ve lost three weeks of time. Invoice often, rather than just at the end of the month because your money will start coming through faster. That certainly helps your business. And another tip to me that seems extremely obvious, but isn’t to a lot of people, is put the date you want to be paid on your invoice. Not 30 days, seven days, put a date, and start chasing from that date. And when you do things with a pattern and regularity, your customers get used to the way you want things done and believe it or not they start falling into line with your way of doing things, not their way of doing things.
The other thing is that people sometimes think that they can’t invoice until they’ve done the job. But I mean if we go to any of the major supermarkets, if you go out to dinner, anything like that, quite often you actually have to pay upfront if it’s one of those sort of like a cup meal where you line up at the counter, you pay before you actually get that service. So I think that’s a real mindset thing for small business people that they can actually ask for their invoices and their money before they do the job in a lot of situations.
For sure, especially if you’re having to pay out for materials upfront. It’s a good idea to try and get some money, or at least partway through the job, you know, if not upfront, but at least partway through the job. Don’t be intimidated when you’re dealing with bigger businesses. I do some bookkeeping for a company that deals with big mining companies and government departments, and we now… Do a lot of their invoicing upfront, and they pay. So people say, “Oh no, they won’t pay for 60 or 90 days.”
Give it a go. You just don’t know. If they value what you do, you would be surprised at when people will pay you. And you’ve got nothing to lose, have you? If you ask for it up front, and they don’t, and they fall back to their normal terms, you haven’t actually lost anything, because that was what you were going to get anyway.
Also, don’t forget, big businesses go broke as well. Don’t just believe that you’re going to be paid, because they are a big business. They go broke, and they go broke a big way. Treat everybody with caution. Decide what you can afford to lose if somebody doesn’t pay you.
Be as Organised as you can
I think, that you need to be systemized in what you do. Have checklists, so that you know you’re covering all of our bases. And it also helps you to remember what to do, because, quite often, people are not doing bookkeeping type tasks all of the time. And be quite specific with it, so that you don’t have to think. You just sit down. You follow the steps, and then, it doesn’t become so much of a chore, and then, you make sure you’re doing all of those things like sending out invoices, and collecting money, then, use the information that you’ve got together. People get intimidated by the terms “budgets” and “cash flows”, but people are always trying to do things in complex ways.
A little bit of information that you understand is far more useful to you than information that you don’t understand, or don’t use. If you just need to write a list of who owes you money, and when, and you tick it off when it’s paid, fabulous. You don’t need great reports. Your budget can just be… Write down the money you know you’re going to spend in a year, and what you think is going to come in. And that can be quite rough, but then, break it down into months, because, quite often, you’ll pay your insurance, or registrations, or different things, only in a particular month. You don’t pay them every month. You get a lot of bills in one month. You may be stuck for cash. That gives you an idea, then, of when you’re going to have to spend money. So then, in turn, it gives you an idea of what money you have to bring in, or if your income is steady, just understand that that extra money in the bank doesn’t mean to say you can spend it.
So, if you can see the future, spreadsheets and technology are fabulous, but if a piece of paper gives you that information and it saves you bacon, it’s fine to do things with the piece of paper. Talking to a person who has developed, and uses, technology all the time, but it’s about understanding what you’ve done and making it useful. Extrapolate those numbers, so that you know what you’re paying every month. Then this is like… If you bridge the of course, you’ll probably have, at best, every three months, so that money has to go out. So, know that those payments are coming in the future, so you don’t spend your money. And that is, basically, also your cash flow. Doesn’t need to be tricky reports, and confusing terminology. It can be quite simple, and then, it’s useful, and then, it helps with your business. You’re not intimidated. You, then, start to do all of these things that big businesses do, but just on a more simplified level, and you’ll be surprised how it can save and grow a business.
Links
Listen to Small Business Talk Episode 39 for the full episode.
Next week on Small Business Talk Podcast I have a very positive chat with a special guest on negative self talk so listen out for that.
