It’s no secret to agency owners that success comes from balancing creative ability, business acumen, and the company’s finances. Unfortunately, although there may be strengths in one or two of those areas, it’s notoriously difficult to be well versed in all three – and it’s usually the financial side which suffers.
Of the most common financial issues businesses face is the inherent difficulty of getting some clients to pay on time. But before you assume there’s a credit control issue at work here, consider for a moment that the reason for your accounting woes actually comes from invoicing difficulties, rather than payment issues.
Why it’s Important to Identify the Issue Early
When it comes to weighing up the consequences of these two hurdles, they seem superficially similar – at the end of the day, they’ll both strangle your cash flow and affect the book balancing further down the line. In reality, however, the invoicing issue is more vexing because it really isn’t difficult to sort, and the results of a revamp could see your business cut wasted time, ease the financial headache of poor payers, and better position you for more rapid and confident growth.
Smarter Invoicing Choices
If you think you may have an invoicing issue (or you’re unsure, but you’d like to clear the process up anyway), then read on for some eye-opening advice – hopefully it’ll get you on track to better financial control in no time!
-Invoicing Milestones
As we recommend to our clients, regular invoicing throughout the lifetime of a project is a sure-fire way to smooth over most of the bumps in your invoicing process. Start by seeking payment before any work begins, and then deciding on milestones which can be worked towards before the next invoice is sent. This manages the whole payment process more closely and keeps the cash flow healthy.
-Remove the Work
Cut out guesswork, time and human error when it comes to delivering a smooth invoicing system by making the most of Xero’s repeat invoice feature. If the amount is the same each month, just set it up to approve and send automatically without any intervention; if the amounts change every month, simply set them to save as drafts first instead. Easy!
-Build a Capable Team
Although the above is useful advice for smaller agencies, agency owners should also be aware that the best way to fix issues with financial control is to build a finance team capable of delivering fantastic solutions, going beyond general box-ticking and compliance checks. The right finance team should empower business owners to identify key areas of focus quickly and clearly, making growth a reality.
Staying in Control
Taking this advice into account to overhaul your invoicing experience is the first step towards closing payment gaps across your business, and contributes to the establishment of greater financial control. When you’ve got the money flowing in and out of the business under control, you’ll find yourself much better placed to make key strategic business decisions that keep you moving forward.
So before you focus your energies on resolving a credit control issue, ask yourself first if the invoicing process can be improved upon first – you’ll know if it’s worked by the healthy cash flow and the big smile on your face!
Need some help in getting invoicing up to scratch? Feel free to get in touch – we’d be happy to advise!
