A business needs money. It is a fact, without money you don’t have a business. All business owners know that cash flow is essential. Making a profit at the end of every month can be the difference between being able to pay all the bills and taking home a salary. This is why a business creates invoices.
There are some business owners who seem reluctant to issue invoices for the work they have completed or for the product they have provided. It is not uncommon for a business owner to issue an invoice up to six weeks after the service has been provided, then wait until their customer decides to pay. Some customers are increasingly paying later and later, if at all. Credit Control is then delayed or not undertaken at all. Consequently; invoices are not being paid. A business can then suffer serious cash flow issues, which ultimately, could cause them to stop trading.
How can this be avoided? There are a number of options a business can employ.
1 Outsource the accounts function to a Bookkeeper. There is a cost associated with this option, but a qualified Bookkeeper can easily issue invoices, assume the credit control function and ensure that the accounts are kept up to date. There are additional advantages of using a book keeper.
a) A good bookkeeper can give some management reports that will give the Small Business owner an idea on how well the business is doing on a month by month basis
b) When the business accounts are sent to a qualified account at the end of the year, the accountancy fees could be reduced as the businesses’ financial records will have been kept up to date.
2 Outsource the function of invoices and credit control to a Virtual Assistant. There is a cost associated with this option, but the business owner will know that the invoicing and credit control have been completed. One advantage for using a Virtual Assistant is that once the VA knows the business they are in a position to do some additional administrative and secretarial work for the business owner.
3 Outsource to a Factoring Service. Factoring is an easy way to alleviate the possibility of any cash flow issues. A small business sells its liability (invoices raised) to a third party. They will forward the business the funds raised on the invoice, deducting circa 20%. Be aware there are different sorts of Factoring, research is highly recommended. Ensure you understand the Terms of Business before entering into any contract.
4 Employ a part-time office assistant. Although there is a cost associated with this option the business owner will also have to comply with all current employment legislation. The goal of any business is to ensure there is cash in the bank to pay suppliers, pay staff and create profits. If a business is reluctant to issue invoices and undertake credit control then there will be limited cash for the business to carry out any of these tasks.