How to choose the right time to send an invoice
This is a question asked by businesses the world over: how do you choose the right time to send an invoice? The topic is the subject of some hot debate with lots of well thought through ideas and clever suggestions and it is the subject of a great deal of research by different organisations.
Cash flow is a huge issue for a business and if they get that wrong, it matters little how effective they are as an organisation, how good their delivery and response times are etc. The simple fact is, that as a business, there has to be more money coming in compared with money going out and if there is too much cash demanded from you before being able to access it from your clients, then problems can arise as no doubt as a business you will have more than your suppliers to pay.
So when is the right time to send an invoice?
Unsurprisingly, the result of the research into the timing of invoices has produced conflicting results and as with any piece of research, it very much depends on the data that you use. The truth is in fact that the best time to send your invoice is at a time that best fits with your client’s payment schedule. If your client for example pays all invoices on the 1st of the month, there is no point in sending that particular client your invoice on the 2nd of the month and expecting prompt payment. It is best to have that discussion with your client right from the beginning, after all this may be a client with whom you are going to have a long term business relationship and it is easier for all parties if there are clear parameters on invoicing and payment. It can be frustrating on both sides when there are not clear expectations and business relationships can quickly sour over money.
As a business, it is always a good idea to have a flexible approach to your invoicing, you want to be able to accommodate as many of your clients as you can without, however, leaning too much their way. If you are a business with costs which have to be met ahead of a delivery schedule, then you must factor that in and perhaps be prepared to invoice your client ahead of the work beginning and asking for part payment. You cannot always rely on a client to pay for your service as by the time that you have completed their work, their circumstances may have changed and they no longer see the need to pay you as they no longer require the goods or services. Asking for a deposit goes to protecting you from that and asks your client for their commitment to your service.
The long and short of invoicing is to consider all of the circumstances in front of you and work with your client. Do however be prepared to keep on top of monies owed and if necessary, be prepared to send reminders.