Invoices are something you issue to your customers after conducting business. An invoice is a clear indication of the services you have rendered or a product you’ve supplied along with all the associated costs. Invoices are part of doing business and they keep both parties accountable for their commitments.
Having a steady stream of money (also known as cash flow) means your business can continue to fund its operations. If your invoices aren’t serving you well, the resulting cash flow gaps can literally spell doom and gloom. By implementing the right invoicing processes, you not only mitigate any cash flow concerns — but you can also secure greater customer loyalty.
Let’s look at what makes up the meat of the invoice — the basic necessities that your customer needs to know who sent the invoice and why. This includes:
- The name of your business and your logo.
- Your contact information — business name, address and contact information.
- The recipient’s name, address and contact information.
- The product(s) or service(s) for which the invoice was issued, along with prices.
- Payment terms and conditions, payment deadlines and invoice creation date.
Now that the necessities have been covered, we’re not stopping there — that was the vanilla invoice. We’re here to elevate your invoicing and have every invoice you send generate a whole lot of additional benefit with minimal effort.
3 Ways to tap into the marketing potential of your invoices
Many businesses, regardless of their size, underestimate the power that invoices possess. They’re often seen merely as receipts — yet they have powerful marketing potential that often goes unnoticed. Let’s face it, the people you do business with will encounter invoices that are produced and delivered by you. Leverage these nifty little sheets to secure consumer fidelity and even help attract new faces.
Take some time to revisit your invoices — assess the layout, format, and overall look of invoices being sent out to your customers.
1. Add incentives
Don’t be basic with your invoice creation process and don’t be afraid to drop a few irresistible incentives on the sheet. What do I mean by incentives? Well, what would encourage you to do business again? Discount codes sound pretty enticing to me. What about referral codes to share with friends? Heck yes! Include them too, now your client has a reason to mention you to their friends and family — aside from your splendid quality and customer service of course. Having discount codes and referral options accompany an invoice is a surefire way to get customers coming back to you with friends in tow.
2. Promote new products
Now let’s assume you’re developing a new product. Guess what? You can promote it through your invoice too. The beautiful thing about an invoice is that people value them and inspect them carefully. All eyes are glued to this document, so why not take advantage of all the attention it manages to garner? Include a message or a notification within your invoice informing people of a new product launch or a sneak-peek into future product development. Get your customer excited about the future and any new offering you will have in store for them. This too can go hand-in-hand with the aforementioned promotional codes that may be included in the invoice.
3. Encourage feedback
Use your invoice as a means to encourage customers to give you feedback. This is a great way to further improve your business model and product for any future purchases, thus elevating the perception of your brand and developing social proof.
Keep in mind that customers are the reason for your existence, if it weren’t for them, you wouldn’t be here. Continue to improve the customer experience through a scrupulous feedback gathering process, which can be enhanced through the use of invoices. Include a contact number, or a website URL in your invoice that customers can use to share their feedback.
Invoicing and cash flow
Being able to effectively forecast your future financial situation is critical for any business. This information guides marketing or product development budgets, how you will proceed with expansion and let’s not forget your investors who may be looking to assess your future prospects.
By staying vigilant and organized throughout your invoicing process, you’ll have better information from which to build your cash flow forecasts. For instance, if you’ve set the right terms and your collections are working effectively, you’ll have a better turnover ratio. On the other hand, if your terms aren’t beneficial to your business, cash flow forecasting will help you pinpoint the issues.
Also, keep in mind who your business owes. You probably have obligations to reimburse vendors and various suppliers under strict deadlines, don’t overlook this important detail. Revert back to your accounts receivable and take note to see if your future expected cash flow meets or exceeds your own debts.
Use outstanding invoices to quickly access cash
Lastly, I want to share something that some businesses — especially new ones —may not be aware of. What I am talking about here is invoice factoring. There may come a time when your business will need to access a sizeable sum of cash quickly, without actually having the necessary funds in hand. In these instances, your outstanding invoices can be converted into cash quickly through a process known as invoice factoring.
You don’t have to wait for your clients to muster up their debt before a deadline that could be a month or more down the road. You can sell off a portion of your accounts receivable to a third party (known as a factor) at a discounted rate. Accounts receivable factoring is typically used as a short-term financing and may be used in conjunction with other financing tools like loans, credit cards or a line of credit.
Stay vigilant of all your outstanding invoices. Some clients can be rather unruly and may not follow through with their financial obligation stifling your cash flow. A reliable factor can alleviate some of the financial woes and give you more breathing room while allowing your business to keep moving forward. (Plus, the factor often takes care of the collection process.)
Wrapping it up
Often times invoices are seen as the most basic form for depicting a business transaction and nothing more. The good news is that invoices can become so much more and help garner attention and respect your business actually deserves.
Your marketing efforts along with business’ fiscal health can be elevated by carefully structuring your invoices and their delivery method. Now that you’re endowed with this knowledge, maybe the next time you create and send an invoice, you’ll fully realize the potential this document holds.
This guest post was provided by InvoiceBerry, smart invoicing for small businesses and freelancers.
To create cash flow forecasts that help you see patterns in your accounts receivable processes, create a free PayPie account and connect your accounting software.
PayPie currently integrates with QuickBooks Online. Additional integrations are coming soon.
The information in this article is not financial advice and does not replace the expertise that comes from working with an accountant, bookkeeper or financial professional.
Images via Pixels and InvoiceBerry.