Technology

4 instant tricks to stop burning so much money and increase your business cash flow

ERROR 1: DO NOT LINK YOUR BANK TO XERO

Why?

Potentially, you could lose when a customer pays, or worse, not realize if they don’t pay, and you can run into cash problems using old data, rather than updated information in real time.

To do:

Imagine logging into an application every day that has pulled banking transactions from your online banking system. This means that you can immediately match payments in and out of your bank to your customers’ invoices and any payments owed to vendors, such as accommodation costs, contractors, etc. Xero Touch runs on IoS and Android and provides a real-time manual update on your business finances, which means you can be anywhere in the world and never be in the dark.

ERROR 2: NOT BILLING YOUR CUSTOMERS ON TIME

Why?

There’s nothing worse than getting the job done, deviating from the next job, and forgetting to bill the first job. This can cause cash flow problems if it spreads to more and more jobs; However, all too often we find that people are literally too busy with work to act.

To do:

1) For one-time projects, upon agreeing to the initial fee for the job, create a quote in Xero which you can then turn into an invoice at the touch of a button when the job is done; Y

2) For prepay or repeat jobs, subscription revenue creates a recurring invoice in Xero, which means the invoice is issued every month until you tell it to stop. For example, our bills go out on the 1st of each month while we sleep!

MISTAKE 3: NOT SENDING YOUR INVOICES TO THE RIGHT PERSON

Why?

If your clients are small businesses, this won’t be a big deal, as the person you agree to do the work for will likely pay the bills as well. However, imagine that you are dealing with much larger companies, with multiple sites, multiple departments, and running processes insane by bureaucracy. If you don’t hand the bill over to the right person and department, it just won’t get paid when you need it.

To do:

When the rate is agreed with your contact, get details on how the invoice will be paid, specifically finding out if the invoice needs a reference to your system (for example, a purchase order) and the details of who the invoice should be sent to by email (never post an invoice when it can be emailed!). Then email the Xero invoice to your contact and the payments department and attach the entire backup copy to the invoice when submitting.

MISTAKE 4: DON’T MAKE PAYING THE BILL EASY Why?

Your customers are busy people just like you. What would you do if you received an invoice without the bank details? You involuntarily procrastinate and say, “I have to check that out” while you never do, as a million other things are coming.

To do:

Xero now allows you to insert a “pay now” link on your invoice. So when the email is received (see Mistake 3: Never send an email other than by email), the recipient can see the backup of the invoice and an extremely useful button that allows them to pay literally with a few clicks. Imagine getting paid about an hour after the bill comes out! We recommend that you set up a PayPal or Stripe account for credit card payments and GoCardless for bank transfers to offer as many options as possible.

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