How to nail invoice management

Build invoicing into the heart of your workflow

Some businesses treat invoicing as an afterthought. It’s seen as a tedious necessity or a chore – something that’s unavoidable and can never be interesting.

That’s unfortunate because those businesses are missing out on some important knowledge. They’re also not being paid as fast as they could be. While it’s true that invoicing is never going to be a stimulating process, it can be made easier and more central to your business. That in turn will improve your cashflow. And there’s nothing trivial or tedious about healthy cashflow.

So in this guide we’ll look at how you can build invoicing into your workflow. This will simplify the process, make it much less of a chore, and help improve cashflow. It will also help you see invoicing in a whole new light.


Understand your workflow

Most small businesses have a straightforward workflow:

  1. Contact new or previous customers – or wait for them to come to you.
  2. Agree to sell products or services to them.
  3. Fulfil the sales order.
  4. Receive payment.

Of course this is just an overview. The details will vary from one business to another, and each of the elements above has its own tasks and challenges.

You may also have several orders running at once, at different stages. For example, you might be halfway through one job while signing a contract to start another.

But looking at this holistic outline helps you identify when to bill your customers for each job. The obvious point is right after fulfilling the sales orders. But this isn’t always ideal.


So when should you invoice?

It’s tempting to try to identify the right time by asking what’s normal for other businesses. That can certainly help, but what really matters is your business. Ask yourself these three questions:

  1. Why am I invoicing?
  2. When do I want to be paid?
  3. What’s the best way to achieve that?

The chances are your answers to the first two questions will be something like:

  1. Because I want to be paid for the work I’ve done!
  2. As soon as possible!

But question three is the important one, and it’s harder to answer. It’s here that you must use your unique knowledge – of your business, your customers and the market you operate in.


Four suggestions for the ideal time to invoice

Use your knowledge and experience to determine when is the best time to invoice. If you do it too late you risk having to chase late payers, which will affect your cashflow. If you do it too soon you risk alienating your customers. Some of them may not appreciate demands for money before the job has been finished.

To avoid having too many late payers, it’s important to note that you should remind customers to pay on time. If you wanted to deter customers from paying later, you could always include a late payment fee on your invoice payment terms.

Here are some suggestions for when you might invoice. Only you can decide what’s right for your business – and it may take some trial and error to find the sweet spot. But these suggestions will point you in the right direction.

  1. As soon as the job is finished – literally
    This is common in retail. If someone wants to buy something from you, they must pay there and then. The exception is when you offer credit, either yourself or via a financial intermediary. But that’s a separate topic and is usually reserved for trusted clients or customers who you know will definitely pay.

    What works in retail can work in other sectors too. Get into the frame of mind that you deserve to be paid quickly for work that you complete quickly. This means you can fire off an invoice as soon as your work is done. Professional clients won’t mind because they value your services. They probably bill quickly too.

  2. Once the sale has been agreed
    Few businesses are able to invoice before the work has been completed. But there are exceptions. If you’ve been asked to fulfil a major contract that will involve a lot of time and materials costs, it makes sense to bill at the start. After all, you’re making a big financial commitment – and so should your client.

    It may not be practical to charge for the full cost of the job in one go. But it’s certainly fair to bill for up-front costs. For example, let’s say you’ve signed a contract to manufacture 1,000 items, or build a house. In both cases you will have significant raw materials costs.

    Don’t put your own business in a precarious position by taking on debt to cover those costs. Ask the client to cover them instead.

  3. During the work
    If the job is a long one, you can also invoice during the work. Identify milestones and agree these with your customer before you start. For example, you might ask for four regular instalments throughout the duration of the work.

    Businesses often go bust due to cashflow issues. One of the main causes of this is failing to charge promptly for major client costs. That’s especially true when the client then goes bankrupt or changes their mind – which happens all too often.

    Remember, the final product will be owned by the customer or client. The financial risk should be borne by them too.

  4. At regular time intervals
    This doesn’t mean bundling all your invoices together and sending them out at the end of the month. Many businesses still do that, but it makes little sense these days. Good accounting software will let you bill clients almost instantly. You can tailor the process to each client.

    If you complete a job in the first week of the month but only invoice on the 30th, your cashflow is being severely impacted. There’s no sense in working this way when there are good alternatives available.

    But it can make sense to bill each individual client regularly. For example, imagine you’re performing PR services for a number of different clients. Invoicing each client every week or every fortnight will keep the money coming in.

Invoice Reminders in Xero

Instead of you spending hours chasing overdue payments, Xero can automatically email reminders to your customers. Just set and forget.

Use the preset timeframes or adjust them to suit your business. Tailor the email message and the days overdue as needed.

When your customer receives the reminder, they can view and pay the invoice online right away.

Control when and how invoice reminders are sent out. Automate the sometimes awkward task of chasing payments and improve cashflow with Invoice Reminders in Xero.

Get Your Head Ready for the 2015/2016 Financial Year…


~ Mark Creedon, Red Monkey Coaching.

The most important aspect when looking to secure future success in your business is to plan for it. There is a saying that “a failure to plan is a plan to fail” and, with the new financial year here, now is the time to develop your plan for success for the coming twelve months.

A business plan doesn’t need to be a complex or complicated document that once completed sits on the shelf collecting dust, rarely seeing the light of day. A truly effective business plan should be more like a readily-available guide or map for where you want your business to go in the coming year.

Normally, little more than a single page is all you need to be able to have a clear picture of where you want your business to be and an outline of the steps you need to take in order to get there. The simplicity of this business plan model allows you to focus your headspace and allows you to spend your energy on the steps and activities that will actually help you to achieve your goals and milestones.



Firstly, you have to think about the overall direction and vision of your business. This involves asking the question, “Where do I actually want my business to be in twelve months’ time?” This will be a matter of looking at the following:

  • Where will my business operate from?
  • Where will my business fit in the marketplace?
  • How will my business model evolve?
  • What staff will I have?
  • What turnover do I want to achieve?
  • What retained profit do I want from the business?
  • What changes within the industry will influence my business?

Secondly, take the time to review and reflect on the action you have taken in business over the last year; highlight the lessons learned, potential areas of growth and identify what actions worked (and those that didn’t) – the Red Monkey Coaching Business Pulse Check Workbook (downloadable at is a great place to start.

Having a direction and clear goals is a great foundation point. However, you won’t achieve those goals and reach the desired direction without having a clear strategy in place to achieve them.

The question to focus on is, “What are the steps and actions I need to take to achieve the goals and who do I need to help me achieve the goals?” To do this look at each goal individually and outline three clear steps that you will take toward achieving the goal.

If you’d like to know more, contact Mark at Red Monkey Coaching.


3 Must Have Tax Tips – Open Before 30 June

The end of the financial year is rapidly approaching. It is time to take some action and get prepared for another financial New Year’s Eve.  It may not be as big an event as the New Year’s Eve of 31 December each year but it does require just as much planning to come out on top.

Here’s 3 tips to help you get through this end of financial year with ease.


Tip #1    Increase Your Cashflow 

Pay expenses prior to 30 June if are you on a cash basis for GST reporting.   If you are on an accruals basis for GST reporting, you only need to have received the invoice for the expenses to make your claim in the June quarters BAS return.  By adhering to these deadlines you will get the GST back three months’ sooner to assist with other business cashflow needs.


Tip #2   Review, Collect and Start Fresh

Review your accounts receivable and see if any of the amounts your accounts are showing as owing to you are actually not collectable.  If they are not collectible, ask your bookkeeper to write those off.  Better still, if you think there is a chance that you can collect that money from your customers make that phone call to try to collect it, or alternatively engage a professional debt collector.    The receivables left on your aged receivables report at 30 June should reflect what is currently owing to your business.


Tip #3   Move Your Bookkeeping Into The 21st Century

Is your bookkeeping up to date?  In an ideal world your accounts would be up to date on a daily basis but I can say that even mine are not updated that regularly!   With real-time accounting solutions now available, the shoebox method belongs in the museum.  If your books are not up to date get a bookkeeper in today to get them into shape so you are in a position to move forward into the new financial year being able to ascertain the financial position of your business at any given time.

These are 3 simple tips to get you through the Financial New Year’s Eve and into the new financial year with ease. If you would like further information on any of this please give our office a call on (07) 3355 6427.



Bank Reconciliation in Xero

Xero is designed to automatically import your bank, credit card and PayPal transactions using bank feeds to make reconciling your bank accounts faster and easier.

Before now, you had to take your bank statement and manually entered the transactions into your desktop accounting software. Then you needed to perform a reconciliation to make sure the two balances agreed.

Xero has simplified this process. Your bank statement is already in your software. Login and see your imported statement on the left, waiting to match your accounting transactions on the right.

What’s more, should you ever get stuck, you can easily collaborate with your accountant. Xero gives you the option to leave a question for them, which they’ll see the next time they log in.

This video tutorial shows you how easy it is to perform bank reconciliation using Xero accounting software.

Statement of cashflow

For small businesses a healthy cashflow is crucial. That’s why the statement of cash flows report is so useful.

It shows you the money…where it came from, and where it went.

While the Profit & Loss (or Income Statement) can tell you if you’ve made a profit it may include income and expenditure that hasn’t been paid yet, or that isn’t in the form of cash, like deprecation.

The statement of cashflows only looks at cash and groups the money going in and going out into useful categories so you can better understand the health of your cashflow.

Here’s how the report works. It’s grouped into three main areas.

Operating activities – which is the cash that comes in and goes out as the result of doing business. Like customer receipts, supplier payments and wages.

Investing Activities includes the purchase of assets like office equipment. Or money received from the sale of assets, or any other investments the business has made.

Financing Activities shows loan repayments, or loans you’ve received from a lender. It also includes any money put in or taken out by the owners.

Use the report settings to compare periods so you can see how money coming in and going out is tracking month by month.

If cash is on the up maybe now is the time to make an investment or purchase that new company vehicle.

The report helps you make decisions about how to use your cash and what areas to focus on to improve.

You can customize the report to get a more detailed breakdown and create new groups within these main sections on the report.

You’ll see there’s already some useful groups there that you can move accounts into.

For example, if you have an interest income account that’s currently grouped with your sales income, you could move that account to be grouped with ‘Interest Received’. Simply drag ……… and drop. You’ll now have a new Interest received line on the report under operating activities.

You can also split the debits and credits of an account and move them to different places.

This is useful for things like a loan. You can split the debits and credits on a loan account so you can see loan repayments and loans received on separate lines on the report for more visibility.

Select the loan account and scroll to the top to split the debit and credit. Now move the credit into ‘Proceeds from long-term loans’ which is the money you’ve received from the lender. Then move the debit into ‘Repayment of long term loans’.

Now you’ll have two separate lines on the report so you can clearly see when you receive a loan and when you repay it.

Once you’re happy with the how the report is organised, save the template so you can use it again.

This report involves organising your chart of accounts to display the information accurately and effectively.

We highly recommend speaking to your adviser who can help you customize and use this report to improve cashflow.

If you don’t have an advisor you can find a certified Xero advisor in your area by visiting