How to nail invoice management

/in /by

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

/in /by

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…

/in /by

PLANNING FOR BUSINESS SUCCESS

~ 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.

 

Direction

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 www.redmonkeycoaching.com) 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.

success

3 Must Have Tax Tips – Open Before 30 June

/in /by

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

/in /by

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

/in , /by

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 xero.com/advisors.

Does your business need a mobile site

/in /by

First impressions are important

Your customers and prospects are on the move and often in a hurry. And it’s likely they’re on a mobile device while looking for products or services online. This means it’s vital you have a well-designed and well-written mobile site to make a great first impression. Without one, you could be losing valuable sales. It’s estimated that 57% of mobile users will leave your website if doesn’t load after three seconds. And 30% of users will abandon a purchase if the shopping cart isn’t designed for a mobile device.

A mobile site is a great way to quickly introduce your brand and offering to people. If you then decide your customers could benefit from a mobile app, you can look at going down that path too.

 

Think about what your customers need

Rather than think about mobile sites or apps as tools to choose between, consider the needs of your customers first. What will be most beneficial to them? Consider where, when, how and why they want to interact with your business. This will help you decide whether you need a mobile site as well as a mobile app.

 

How are mobile sites and apps different?

An app is a piece of software created for a specific purpose. It’s built for a certain type of device or mobile platform.

Apps are usually downloaded by customers once they have an idea about your product or service. If an app has useful content, is easy to use and provides clear benefits, it will give your customers a reason to keep using it. You can form a valuable relationship.

A mobile website is just a version of your website viewed on a mobile device. In the early days of mobile technology, most businesses had two versions of their site: the desktop version and the mobile version. This was popular for awhile but it started to cause problems and was costly to manage.

Today, well-designed websites are built to be mobile-friendly or ‘responsive’. A responsive site adjusts seamlessly to work on mobile devices, tablets and desktops. For example, large images that are unnecessary on a smaller device may be hidden. Menus only display when a menu button is selected. Other on-screen elements may be neatly stacked on top of one another when viewed on smaller screens.

Mobile sites and mobile apps have different purposes. You need to understand these before deciding where to invest your time, energy and money.

 

The advantages of a mobile site

Mobile websites are used more by customers and prospects who are engaging with you for the first time. Or they may be early on in the buying cycle at the ‘just looking’ stage. Here are some advantages:

  1. You can reach a broader audience
    Every mobile user has access to a mobile browser. So any new customer or prospect using a search engine will be able to find your business.


  2. It’s easy to publish and update content
    With a mobile website, it’s easy for you to make updates and changes to your content. This can be done using your website’s content management or publishing system. Changes and updates can be instant. Apps often take longer to update.


  3. Mobile sites are available across multiple devices
    A mobile website works on any device. You don’t need to create and maintain a different website for different browsers or platforms.


  4. You have flexible design options
    You don’t need to comply with the standards, guidelines and requirements of an app store or marketplace. You just need your website, a domain name (URL) and web hosting.

The advantages of a mobile app

Remember that mobile apps are more likely to be for people who already know something about your business. They usually have a good idea who you are and what you offer. You’ve given them a good reason to download your app. Here are some advantages of apps:

  1. Your customers can focus on a specific task or purpose
    Think about the common tasks your customers perform, for example, buying food, checking their account or browsing products. An app can provide a clean and simple interface that lets your customers do this quickly and easily. Plus, it provides you with a direct and uninterrupted marketing channel.


  2. You can provide a customised or personalised experience
    An app collects lots of information about your customers. This makes it easier to offer them personalised communication based on their interests, location, usage, contacts and more.


  3. Apps handle complexity well
    Apps are perfect for calculations, charts or reports for your customers. For example, an app can quickly provide financial history, fitness reports or listening recommendations.


  4. Your customers can use an app offline
    Apps provide your customers with access to your content or functions without an internet connection. So for instance, your customers can still read articles, listen to podcasts or browse product catalogues while offline. As soon as they’re back online, the app can then pass the stored information to your server or database.


  5. Quick to serve up content
    A well-designed mobile app performs actions much faster than a mobile website does. Apps usually store data on the the mobile device, in contrast to websites that generally use web servers. This means that mobile apps send and receive customer data swiftly.


  6. Extra functions are available
    A mobile app can be designed with a lot of elaborate functions. These are based on the gestures people use on a mobile device. Examples are ‘tap,’ ‘swipe,’ ‘drag,’ ‘pinch,’ ‘hold,’ and more.

Mobile sites and apps have some shared advantages

Whether you focus your attention on a mobile site or a mobile app, both offer some great functions. Whatever you do, make sure customers can easily:

  • Buy from you
    If you have an online store, your mobile site or app should provide an easy purchasing process.


  • Find their way around
    Always make sure your customers can achieve key tasks quickly and easily without frustration.


  • Call you
    Let customers call your business with one click or tap.


  • Find you on a map
    Make it easy for customers to get directions to your business without searching or typing your address.


  • Check your opening hours
    Business hours can be a selling point so display them prominently. If you’re an early-morning coffee shop, for example, you want parents to know you’re serving, when their kids get them up.


  • Sign up for alerts and emails
    Provide a quick and easy way for people to sign up for marketing lists and loyalty programs.


  • Share your content
    Make sure your social sharing buttons are prominent so that users can easily share your content.

Think about your business goals to get the most out of mobile

Your business may already have a mobile site and possibly an app as well. If you haven’t created a mobile site or an app, now’s the time to start. Like any business investment, some fundamental questions still apply:

  • What are your business objectives?


  • What do you want people to do when they find your business on a mobile device?


  • What do you need to provide to get new customers or prospects to take that action?


  • What are the pros and cons of a mobile app and mobile website for your business? Make two lists.


  • What are the costs and benefits for your business of each?

Mobile usage surpassed desktop computer use years ago. Now it’s not just about having a mobile plan in place – but about how fast you can implement it. The mobile marketing landscape is complex. But with a solid plan that fits your brand, and by working with the latest technologies, you can gain a competitive advantage.

Security Advice from Xero

/20 Comments/in /by

If you ever receive an unsolicited email that looks like it’s from a well known company asking you to verify personal details like your login, or to open or download a file, this may be what’s called a phishing scam.

These emails might look like they’re from your bank, a popular online service, or even Xero, but they’re not.

If you receive such an email be assured Xero has not been comprised in any way, and your data is still safe with us.

If you’re ever unsure if an email is from us, don’t click on any links. Just forward it to phishing@xero.com.

Never give away your login or other personal details for any online service you belong to, no matter how legitimate the email looks. And never download a file or click on a link you’re unsure about.

If it smells fishy it probably is. So use common sense and don’t get hooked by a phishing scam.

For more information and useful security tips visit our security page at xero.com/about/security

Split Screen on your iPad

/in /by

Save time and do more with Xero on your iPad!

Split-screen multitasking means you can work in Xero and access other apps at the same time.

View an order from a customer that came through as an email side-by-side with the invoice you create in response.

Create an expense claim with the email or PDF open next to the Xero app.

Have help.xero.com open with the details on how to do something in Xero.

Facetime or use online messaging with customers while sorting out their orders or with your advisor to help you on the spot while you’re in the app.

Multitask with Xero on your iPad and get more done, faster..

To learn more visit www.xero.com/mobile