Our insight article last week focused on improving your invoicing in order to optimise your cashflow, with some help from Xero’s “Invoicing Survival Guide”. This article is the second in the series and builds on this with other easy to implement changes to your systems and the operations that can make a big difference to your cashflow.
One of the areas covered in Xero’s guide is to include on the invoice the ways in which your customer can make payment. Particularly when your sales are to individuals and small businesses it can vastly increase the payment time if you send these invoices electronically and with a “Pay Now” link to your payment provider, allowing your customer to make a card payment immediately. Statistics from Xero show that this means that the invoices are paid 50 per cent faster or 20 days sooner on average.
The vast majority of invoices that I see contain the seller’s payment terms. However, how often are these enforced? You need a process for ensuring that invoices are politely chased, ideally before they are overdue, but certainly after. Xero has introduced a feature called Invoice Reminders to help assist with this, meaning customisable emails can be automatically sent to your customers at certain points in time. Typically this is just before payment is due, once the payment is overdue and again as the payment becomes more overdue. This simple feature has had a big impact for a number of my clients and is the key message behind this article – engaging with your debtors is essential, but it need not be onerous.
There is another option for chasing your debts using the Xero platform and that is integrating with additional software, such as Chaser. We will review Chaser in more detail in a future post as it warrants more attention, but essentially it takes the Xero invoice Reminders to another level, offering much more detail, flexibility and a human touch. Their motto is “Polite Persistence Pays” and that perfectly describes what it is designed to do.
Bromhead are Xero Platinum Partners, meaning we’re experienced in dealing with Xero and designing an app stack which will automate the day to day systems within your business. We have experience with a large number of apps that integrate with Xero and can train your team on how to use them as efficiently as possible.