Know how Past Due Invoices can help Tackle Late Payments

invoice

SMBs bear the brunt of late payments, which hit hard on the underpinning functionalities and success of organizations.

As facts are best told in numbers, here is a survey conducted by Marketvoice on every aspect of invoices for small businesses. The results of this survey are based on data collected from over 80,000 invoices issued to different companies in nearly 90 countries.

The key facts derived from this data are:

  • 62% of invoices are paid late
  • 1/3rd of the invoices are paid more than two weeks late

Find below an image that shows the amount of delayed payments made to companies from different sectors.

late payment days

Source

Is there a way to tackle this challenge effectively?

Though different types of invoices exist, the past due invoice helps initiate the process of getting the past due amount from customers.

Let us understand past due invoices.

What Is a Past Due Invoice?

A past due invoice is an important part of small business invoicing. It is an official document reflecting the billing statement that refers to the amount that has not been paid within its due date. Typically, SMBs implement a structured process of sending invoices for services to their clients. They usually have online invoice software in place that sends invoices with details of the payments.

If the due date lapses, the invoicing tool automatically triggers a past due invoice with details about the overdue payment and any penalties for the time lapse.

When Is a Past Due Invoice Needed?

Usually, in SMBs, projects are finalized, developed, and delivered in advance. They are either paid for in installments with the ongoing work or after completion. Clients begin using the product, experience its advantages and clear payments from the profit they obtain. This is not due to the lack of trust in the service/product provider, but because clients are not always equipped with heavy funds.

In this scenario, service providers seek the help of online invoicing software that maintains accounts of payments received and those that are due. If a client fails to pay up and the time period provided lapses, the invoice software immediately sends out a past due invoice as an alert.

Who Past Due Invoice Can Help?

Freelancers

Though freelancing has its own benefits, freelancers frequently experience the pain of not being paid on time. They can use the past due invoice to inform their clients that they have a payment due.

A past due invoice helps freelancers convey to their clients that they need to arrange funds for overdue payment. This invoice may also include extra charges for late payment, if applicable.

Retailers

In a retail set up, managing inventory is one of the most challenging tasks. A retailer ideally places an order for the products from the wholesale provider and begins to distribute them. A partial payment is made for the products received.

In this case, the wholesale provider may find that payments are pending and the due dates have lapsed. He may send out past due invoices to inform the retailer about the past due amount.

Purpose of a Past Due Invoice and Its Role in Collecting Payments

Past due invoices also help in collection of due payments in a streamlined manner. This procedure includes the following steps:

Reconfiguration of Payment Terms

A service provider may advice the client about making full or partial payments within a given time. He may also reduce the time provided for the payment or charge a penalty for the late payment.

Checking for Errors

An error-free invoice may help speed-up invoice approvals, facilitating faster payments. This may involve a third-party to proofread invoices and check for errors.

Review of Credit

This includes reviewing the financial position of the customer if a medium-to-large credit request has been made. This review shall include an examination of the client’s financial statements and credit reports.

What Information Needs to Be Present on a Past Due Invoice Template?

  • Invoice number
  • Invoice date with payment due date
  • Customer/service provider name and contact information
  • Detailed split-up of services rendered, including dates, descriptions, man-hours involved, manpower invested and applicable charges
  • The subtotal and total of the amount to be paid
  • Specific payment methods accepted
  • Terms and conditions for early or late payments, if applicable

What to Expect after Sending a Past Due Invoice?

Past due invoices harm the credit of any particular individual/company. Service providers may reduce the credit limit or even stop accepting project proposals.

Long-standing past due invoices are eventually directed to collection agencies. This may result in a permanent discredit on that particular company, leading to other service providers limiting their business association.

A service provider may alert the customer and request a payment multiple times after sending a past due invoice. If the customer fails to revert, such invoices are directed to collection agencies.

These are the steps undertaken after issuing the invoice:

1. Sending a Dunning Letter

This is a low-key reminder message that conveys the amount due, invoice number, and invoice date.

2. Reminding over Call

If a dunning letter does not receive a response, a personal phone call is facilitated to know the status of the payment.

3. Escalating

If the service provider is not able to speak to the concerned person over call and doubts the intention of the customer, the provider may escalate to the accounts or senior management.

4. Setting up a Payment Schedule

If the customer is in a financial crisis, the service provider may help by breaking down the payment into installments and scheduling it. However, this is backed by a personal guarantee for the payment from the customer’s side.

5. Taking Legal Action

If these attempts fail to obtain the payment from the customer, an attorney letter may be hired to issue further warnings.

6. Filing an Involuntary Bankruptcy Petition and Suing the Customer

If the service provider finds that the customer has not cleared payment dues for other companies as well, he along with these companies may together file a bankruptcy case and initiate legal procedures accordingly.

It should be noted that the first few points are modest efforts to get payments from the customer while attempting to pursue a cordial business relationship. The remaining aspects focus on simply getting the due payments based on the virulence of the situation and may result in the discontinuation of the business association.

Conclusion

Past due invoices play a pivotal role in the payment cycle. They help service providers remind their customers about pending payments and that they need to arrange funds within a stipulated time to avoid functional hiccups.

The incorporation of effective online invoicing software can ease payments collection by triggering past due invoices, when required. Have you implemented one to manage your payments? Do share your experiences with us in the comments section below!

Know How Pro Forma Invoices Can Help Decode Challenging Sales Cycles

accounting

Striking the productive balance between multiple facets of a business is no easy feat. The realization of delayed and unpaid invoices makes it furthermore demanding.

Fundbox surveyed a few SMBs to understand the impact of unpaid invoices and found that across the United States, on-time payments can help SMBs hire an additional workforce of 2.1 million employees.

Is there a strategy to effectually facilitate timely payments in SMBs?

A sales cycle initiated with a pro forma invoice can help streamline payment procedures. Check out the details right away.

Understanding Pro Forma Invoice

What Is a Pro Forma Invoice?

A pro forma invoice is a binding agreement sent to customers before or along with the project delivered. This invoice includes specifications like the number of project modules to be worked on, technical specifications, manpower involved, and billing hours. Though it contains a precise sales price including taxes and miscellaneous fees, this value is subject to changes.

Amongst the different types of invoices, the pro forma invoice is primarily utilized to provide a good faith estimate and save the customer from unpleasant surprises regarding the amount charged.

These invoices for small businesses help curb bottlenecks in their internal sales approval process. It also helps streamline sales procedures by eliminating chances of additional back-and-forth after the confirmation of a sales deal. Pro forma invoice ensures that the parties involved have agreed upon all conditions, before proceeding with the final deal.

When Is the Pro Forma Invoice Needed?

A pro forma invoice is used in the early stages of a project cycle when a service/product has been finalized and the payment is due.

  • A pro forma invoice in small business invoicing is needed as:
  • A proactive negotiating tool between the service provider and the customer.
  • A voluntary document to facilitate the smooth functioning of sales procedures.
  • A blueprint of the entire project cycle with key information to be used in the final invoice.

SMBs have begun to implement invoicing tools to facilitate faster payment cycles. Such tools do not limit to billing invoices, but also accommodate pro forma invoices to kick-start the sales cycle.

How Is Pro Forma Invoice Incorporated?

Pro Forma Statements for Business Mergers and Alliances

Undertaking a merger is based on the assurance of the parties involved. Pro forma documents help nurture, reinforce this assurance with appropriate declarations, and have the parties identify key considerations that may impact business processes.

Pro Forma for Start-Ups

A proposed start-up company may look towards potential investors for funding. A pro forma document, in this case, will assure that the start-up will be profitable and financially stable. This statement highlights the primary strengths of the proposed company, thereby acting as motivation to rely upon and invest.

Pro Forma Statements for Budgeting and Planning

A pro forma statement will include the required budget and timing about the company’s future cash requirements. It will include approximate estimates as placeholders that can be developed later. It helps companies to be financially equipped to prevent unprecedented delays and overdue payments.

Pro Forma for Retail Stores

When a customer approaches a retail store for a purchase, the order is placed and the product delivered. A pro forma invoice mentions the details of the purchase with an estimated charge. The final invoice is generated after product delivery. The final invoice is close to the estimate in the pro forma invoice. The buyer is free to make modifications and negotiate before the final invoice is sent.

What Is the Purpose of a Pro Forma Invoice?

The purpose of a pro forma invoice is to:

  • Provide an overview of the charges involved in the project cycle including project requirement, modules to be worked on, and billing hours involved.
  • Facilitate faster payment cycles by providing an estimated sales price, thus preparing the client to arrange necessary funds, resulting in prompt payments.
  • Declare value of the project with technical specifications, planned man-hours, and billing charges for legal clearance, if applicable.
  • Allow modifications in sales specifications before finalizing the delivery of products/services.

What Information Should a Pro Forma Invoice Contain?

A pro forma invoice should specify details of:

  • Invoice number
  • Name and address of service provider/customer
  • Name and address of service provider/ customer
  • Description of the products/services involved.
  • Detailed information about subtotals involving tax and deductions.
  • Details about additional charges, if any.
  • The validity of the invoice.
  • Proposed terms of sale.
  • Proposed terms of payment.
  • Certifications required by regulatory bodies.
  • A signature, stamp, and seal of the service provider.

What to Expect after Sending a ProForma Invoice?

After the proforma invoice is sent, the customer may proceed with the project, conduct negotiations or drop the sales deal. If the customer decides to continue with the project, he will begin the process of payment based on the terms mentioned in the pro forma invoice.

A few other aspects of proforma invoices are:

  • They are not finalized invoices and are open for modifications.
  • They cannot be used as a legal invoice for services as they do not have a unique invoice number.
  • This invoice format is not predefined and varies based on requirements.
  • They do not have a fiscal value and cannot be included in accounting records.

Conclusion

Incorporating proforma invoices into the sales cycle can be beneficial for both, the service provider and customer. As a part of the billing software for small businesses, these invoices provide a sneak peek into the sales cycle helping the service owner and customer to be well- equipped financially and strategically.

If you are a business owner facing similar challenges, initiate your next sales pitch with a proforma invoice generated by simple invoice software.

A good online invoicing software can help SMBs sending out effective proforma invoices to clients for speedy transactions. Have you started using one for your small business? Do let us know your thoughts.

How Online Interim Invoicing Can Turn Things around for Your Small Business

small business invoice

Running a small business in the age of rapid globalization is a challenge. As a business owner, you have to wear multiple hats. You are the store manager, customer care executive, marketer, and the accountant, all at the same time. However, one of the frustrating and mundane responsibilities you have to carry out is dealing with invoices…

Only timely invoice payments will ensure you are bringing in more money than you are sending out. Unfortunately, late invoice payments plague many SMBs. A quarter of SMEs in Northern Ireland and over two fifths in the UK suffer from late payments with over half them being forced to write off up to 10% of their turnover.

In other words, if you don’t want to lose your hard-earned money, you need a strategic small business invoicing strategy. That’s where online interim invoice can help you.

Let’s start with the basics.

1. What Is an Interim Invoice?

Instead of asking for the payment in one lump sum, an interim invoice allows you to collect the total amount in small installments. You can either design these installments as fixed monthly payments or when a particular stage of work is complete. You will need to send the final invoice after the project ends with the details of interim bills and respective payments. Almost every online invoice generator allows you to send an interim invoice.

Let’s say you are offering SEO services to ABC for six months starting from 1st August, 2019. You can charge the client with $300 each month. For the first five months, you will be able to collect a total of $1500 from the client. In the final month, you can foot the final bill for $300.

However, you will need to make the adjustments in the final bill for extra work hours (if any) plus the profit you intend to make. For example, if you did extra work worth $500, and intend to make a profit of $600, your final invoice will be $1400.

Outstanding Monthly Charges $300
Extra Man Hours $500
Profit to be Footed $600
Total Final Bill $1400

The total amount you will collect from the client in this case will be $2900 ($1500 + $1400).

2. Why Use Interim Invoices?

Most small businesses use interim invoicing for the following three reasons –

  1. Maintain a Liquid Cash Flow – As you keep getting monthly payments, interim bills allow you to maintain the cash flow. A highly liquid cash flow, in turn, helps you run your business smoothly without incurring unnecessary debt.
  2. Avoid Costly Write-Offs – It can also help you avoid costly write-offs as you get a bigger chunk of your payment before the project is over. You can afford to follow-up for the final outstanding amount via email. If the client stops paying in the middle of the project, you can also stop working until the dues are cleared.
  3. Offer Flexibility – This is an advantage for your clients. Instead of arranging for a lump sum payment, they can pay you in small installments. You can also add or remove services during the project tenure and charge the client accordingly.

3. When to Use Interim Invoices?

As you can see, you can use interim invoice only for large projects or services stretching over a long period. Usually, you can use it for projects that will run longer than three months at least. You can’t use this method for small projects and short-term contracts. You will also need to consult the client to see if they are open to this idea. Although it is rare, some clients may refuse to use this invoice format.

4. Understanding the Structure of an Interim Bill

The structure of your interim bill change depending on the type of service or project you are undertaking. For example, a contractor will need to provide measurement details along with measurement books, a statement of recoveries, deductions, advances, and extra payments if any, and cumulative information of work completed till the date of billing.

On the other hand, a digital marketing agency will need to include only the details of completed work, work in progress, and the amount billed as decided in the contract. However, usually, an interim invoice has the following details.

  • Invoice number
  • Date of invoice as well as the due date
  • Purchase Order (PO) number
  • Bill-Of-Material (BOM) number, if applicable
  • Name and contact details your organization and your client
  • An itemized description of services and products you are charging for
  • The total amount you are charging including the breakdown of relevant taxes, discounts, and any other charge
  • Terms of payments, including late payment charges, if applicable
  • Special instructions or notes for the client, if any

In addition to this information, you will need to mention the total due amount in the final invoice when the project is complete along with the details of all previous interim invoices.

Once you have sent an interim invoice, you should expect the client to make the payment within the stipulated time. If not, you will need to follow up. Today, invoicing software has made online invoicing easier, to create different types of invoices, including interim bills. You can also integrate almost any invoicing tool with other business applications to create more accurate invoices and an automated follow-up via email reminders.

Parting Words

As you can see, an online interim invoice is a powerful tool for small and medium businesses. It will not only help you maintain cash flow, but also offer clients the flexibility of paying in small installments. Are you still using an Excel sheet for your small business invoicing needs? Maybe, it is time to switch to an online invoicing tool. The question is when are you going to do it? Let us know in the comments section.

Online Invoicing for Small Businesses: Brief History & 5 Essential Invoices You Need

online invoicing

Findings reveal that 27% of small and midsized businesses (SMBs) admit that they have a hard time creating and sending invoices, let alone tracking them.

As per a HubSpot survey of 400 SMBs, 49% have a hard time following up on late payments, and 46% find it difficult to receive their payments on time.

It’s no secret that small business owners wear several hats, but sometimes this can be overwhelming. While they’re supposed to focus on the strategic and money-making aspects of the business, they often find themselves taking care of manual tasks that can easily be automated. One such time-consuming task is invoicing.

One may say that invoicing is crucial to getting paid for the products/services provided, business owners need to realize that time is money. There is no money to be made for the time spent on creating, sending, and organizing invoices.

It is best to automate invoicing jobs to not only save precious hours, but also streamline the process, make it error-free, and ensure quick payments. You can put different types of invoices to use for your various business payment needs. Meanwhile, you can take care of business activities that help you rake in additional revenue or attend to your customer needs.

Invoicing should never feel like a hassle or slow down small business operations. If you think it’s hampering your productivity, using online invoicing software can help. It will improve your experiences with your clients in these ways:

  • Provide Accurate Estimates before Invoicing

You can proactively prevent the chances of answering verification questions and addressing disagreements with your clients at a later stage by creating professional-style invoices with the help of small business invoicing software. Using its templates will ensure that both, you and your clients are clear about the entailments of the project and associated costs even before starting work on the project.

These type of invoices can also help you detail your payment terms and establish a healthy work environment right from the project’s inception. This, in turn, will ensure that you don’t have to spend hours going through agreement terms and conditions over and over again to answer clients’ queries.

  • Add Specifics and Branding Standards

Your invoices should help you get easily identified by your clients, so establishing strong brand standards is necessary. They should also emphasize your brand’s values consistently in all your communications.

Certain important specifications should be mentioned in every invoice that is created for better organizing. It helps to have a numbering system in place so you can assign a unique number/code to each invoice for easy tracking. Your invoices should also specify your contact details such as your office address, email ID, and phone numbers.

Moreover, make sure the specifications mentioned cover the terms and conditions of the completion of the work and the payment. Even though these figures and stipulations are included in the written agreement/contract, your invoices should reinforce them to the client as and when they are issued.

Purpose of Invoicing

Businesses send sales invoices to their clients after providing them with goods or services. The invoices serve as either written or electronic documentation of the transaction between the business and the client. It is crucial that businesses maintain a record of all the sales they make to protect their interests in case a dispute arises in future.

The purposes of invoicing include:

  • Record Keeping

One of the primary purposes of invoicing is to chronicle your sales figures accurately. It is an efficient way to track specific details such the date on which the product was sold, the price that was paid for it, as well as any outstanding debt. Further, an invoice it also aids the process of accounting while monitoring the performance of employees that makes sales and the items they sell.

  • Tax Calculations

More often than not, governments do not formulate a set system or template for the type of invoice businesses should use. However, all business are required to pay certain taxes, which is why invoicing tools become useful in recording cash inflow. It is always a good idea to maintain an ongoing summary of all business transactions with the help of invoices. This comes in handy at the time of filing taxes and ensuring that the precise amount is paid to avoid audits.

  • Legal Considerations

Online invoicing systems help shield small businesses from fraudulent and petty civil lawsuits. The details mentioned in the invoice make it clear that a particular item/service was provided at a certain time. An invoice with the client’s signature is extremely valuable as it serves as evidence of an agreement between the business and the customer. In the absence of an invoice, there will be no record of a sale, which makes businesses susceptible to facing price-related conflicts.

  • Gain Marketing Insights

Business owners need to closely monitor all sales invoices to use the information for targeting its customer base and marketing to them. This includes data such as dates of sales, frequency of sales, products sold, and the selling price of the products. CRM software or marketing professionals can use this information to gain insights on customer demography, peak purchasing times, preferred products, and more. This proves valuable when creating marketing strategies.

  • Inventory Management

Using well-designed invoices for small business can be beneficial to buyers as well as sellers as they help with managing inventory. Whether you employ an automated inventory system that adds and removes items as you receive and sell them respectively or use the traditional paper-and-pen method to manage information about your available stock, an invoice is a valuable document. Sellers can track details about the products that are sold and shipped, while buyers can track the products that are received and stocked.

  • Information Sharing

Invoices for small businesses present all the product and sales-related information in a systematic manner wherein the total price is broken down systematically and explained. It also reflects charges levied for services as well as labor. Other details include the date and time of the purchase, taxes applicable, total product price, date sent, due date for payment, and seller and buyer information.

From Traditional to Modern: The Invoicing Journey

As far as modern businesses are concerned, invoicing tools have been gaining momentum as they streamline and simplify receiving payments. However, the practice of recording the rendering of products and services as well as the consequent transactions is being followed since the last 5000 years.

Before the modern invoicing and billing software for small businesses came along, other methods were used. It began thousands of years ago in ancient Mesopotamia in a region that corresponds to modern Iraq. In the earliest recorded forms of invoices, sellers created IOUs (abbreviated from the phrase “I owe you”) on cards made from clay.
Given the technological advancements in the times we live in, sending invoices on paper, email, and PDF have also come to be considered as primitive methods.

Let’s take a look at how invoices have evolved over the centuries.

earliest invoices
Source: Ohmynews.com

3300 BC: This image depicts one of the world’s earliest invoices, which came in the form of clay tablets. Inscriptions on it were made with the help of a writing system called cuneiform.

Philip I of Castile invoiceSource: Wikimedia Commons

1504: This image shows an account of a £36 down payment made by Philip I of Castile when he bought a painting of the Last Judgment (Paradise and Hell).

invoice for products
Source: Goodfuneralguide.com

1780: The above image shows an eighteenth-century invoice for products purchased for a funeral. Items include coffin, furniture, and more.

earlier invoices
Source: Jot101.com

1870: This image shows a document created by the director of the Sistine Chapel choir. They charged 67 francs and 50 centimes for six lessons plus the sheet music.

earlier invoicesSource: British Library

1891: This is a seventeenth-century invoice for Dutch sea charts which were bought by the British Library.

earlier invoices Source: The Coopered Tot

1904: This is an early twentieth-century invoice from the renowned Graham Distillery Company.

earlier invoices

Source: Wikimedia Commons

1935: This is what the price list for bow and arrows in Belgium looked like.

earlier invoices

Source: Wikimedia Commons

1942: This is an invoice for American painter, Ed Hopper’s Nighthawks from the Chicago Art Institute.

earlier invoices

Source: Wikimedia Commons

1976: This image shows the oversized IBM printing machine model 3800. It was first used for large-scale document printing such as invoices and mailing labels.

earlier invoices

Source: Vintagecomputing.com

1981: Seen above is an invoice for a disk drive meant for the Atari 800, which was among the first personal computers to go on the market.

earlier invoicesSource: DiCentral Corp.

2003: The above image is a screenshot of a Walmart invoice. This is how the typical ERP-powered invoicing solutions looked like (and maybe still do), although offices did need to carry out a certain amount of supporting paperwork.

cloudbooks invoice
2013: E-invoicing software became a total game changer and simplified the invoicing process.

Many businesses create invoices on programs such as Microsoft Word and Excel. Templates for creating such invoices are easily available online. All you need to do is download one, fill out the required data fields, and email it. You can also print the invoice and send it to the client via snail mail. However, this can be extremely tedious and time-consuming for a growing business, especially if you’re required to repeat the same process frequently.

Further, it is also an error-prone process. From entering the wrong numbers to accidentally deleting certain details and messing up the alignment, the scope for going wrong is immense.

For these reasons, online invoicing tools are gaining increasing popularity among small businesses. Not only are they easy to use, they also allow users to create different types of invoices in a matter of seconds.

Invoicing software for small businesses is more efficient and convenient to work with for the following reasons:

  • Automation: Online invoice software automates necessary processes that make invoicing easy and efficient. This includes sending automatic payment reminders for unpaid bills to the concerned parties.
  • Quicker Payments: The invoice format used by invoice software results in a professional design. It includes all necessary information which is conveyed clearly to customers to enable faster payment.
  • Innovative Built-in Tools: Crucial data related to products, customers, prices, and taxes is securely stored by invoice software. This enables businesses to prepare an invoice with only a few clicks.
  • Mobility: Because all data is stored on the cloud, it doesn’t matter where you access it from. Whether you want to work with it at your desk or when on the go, online invoicing empowers you to easily view and manage your invoices. Further, you’re equipped to perform transactions through your mobile devices.

The Cost Conundrum

An increasing number of businesses are switching from paper-based invoicing methods to online electronic methods. However, several emerging businesses continue to employ paper-based invoices and billing systems along with outdated payment processing procedures. This can prove to be expensive, inaccurate, monotonous, as well as extremely time-consuming.

A research by Sterling Commerce revealed that (on average) the rectification of every paper invoice error costs companies $53.50.

The same study also found that “manually-processed invoices cost, on average, $30 per invoice to process, while fully-automated invoices average only $3.50 per invoice to process.”

In modern times, an online invoicing system is more suitable as it is cloud-based and makes it possible for businesses to create and send multiple invoices simultaneously over the internet. Such a system, therefore, helps cut costs and speed up the billing process.

If you’re still using a paper-based invoicing system, the following few factors could be burning a hole in your business’s pocket:

  1. Cost of preparing and printing paper invoices
  2. Cost related to storing paper invoices
  3. Fees for postage and shipping
  4. Fees for offering payment options such as debit and credit
  5. Costs associated with undelivered bills or lost invoice and time
  6. Costs related to handling customer calls and answering questions about the invoices

The Emergence of Online Invoices

If you haven’t already ditched the paper-based invoicing system and adopted online invoicing, here are a few undeniable reasons to do so right away.

  • Bid Adieu to the Challenges of Paper Invoices

As established above, paper-based invoicing process takes time, effort, and money. With an online invoicing system, you can reduce expending valuable resources on all these fronts and optimize your accounts payable functions. When it comes to storing invoices, sending automated reminders through electronic invoices will leave a trail that is easy for you and your customers to refer when needed. This means lesser clutter and smaller mess at the workplace with no need for filing paperwork.

  • Enhance Process Automation

Thanks to technological innovations, businesses have become capable of transforming their processes to collaborate, communicate, administer, and operate better, regardless of the time and location. Online invoicing can not only makes process convenient and accessible, but also allow you to leverage your mobile devices to run your business by sending you timely alerts, updates, reports, notifications, and more.

  • Improve Cash Management

When the economic conditions are tough, which is the case among most small businesses, you need to focus on cutting costs. The importance of optimal cash management cannot be overlooked. Whether it is receiving timely or late payments, or recording details about your invoicing expenses, an online invoicing system can help you keep everything sorted.

  • Facilitate Quality Assurance

Sending low-quality and erroneous invoices to clients will ruin your image and they will probably stop taking your business seriously. This may result in late or no payments, which is the last thing you want. Having an online invoicing system in place will prevent this by:

  1. Verifying and organizing supplier data
  2. Confirming the number work on the invoice
  3. Ensuring the invoice is in accordance with the order, receipt and contract
  4. Assigning to cost centers
  5. Generating correct tax statements
  • Embrace a Green Initiative

We live in times when clients want to be associated with socially responsible companies. Moreover, going green is great for our planet and future generations. Creating less paper invoices and storing files electronically will enable you to do your bit to try and make a much-needed difference to the ecology.

Setting up the Online Invoicing Process to Make the Most of It

Mentioned ahead are a few things to keep in mind to fully reap the benefits of an online invoicing system.

  • Ensure Proper System Setup: Every client you transact with should be assigned a unique numeric code and all invoices sent to clients should include their own respective number.
  • Be Regular with Sending Invoices: Regular billing is key to receiving timely payments without attracting disputes.
  • Mention Penalty for Late Payment: Doing so will keep the clients alert to not miss payments and send them on time.
  • Generate Important Reports Frequently: Whether you need instant or customized reports for a quick glimpse into your business affairs, you can generate all necessary reports whenever needed to stay on top of your business’s financials.

Advantages of Electronic Invoices

Because the online invoicing process is automated, buyers, sellers, and administrators stand to gain a number of strategic and operational benefits. The ability of the invoice software to integrate with other business applications allows businesses to improve efficiencies and revenue-creation capacity.

Apart from benefits such as cost reduction, time saving, and dispute avoidance, e-invoices offer several other advantages.

Advantages for sellers:

  • Quicker and more accurate payments
  • Enhanced productivity
  • Reduced likelihood of invoice rejection
  • Better accounts reconciliation
  • Enriched cash management
  • Improved customer relationships
  • Creation of professional-looking invoices

Advantages for buyers:

  • Augmented accuracy
  • Better productivity
  • Accelerated payment cycles and processing
  • Improved accounts reconciliation
  • Enhanced cash management
  • Decreased likelihood of fraud, disputes, and other payment-related issues
  • Better supplier relationship management

Advantages for business administrators:

  • Enhanced business branding and awareness
  • Optimal use of business capital
  • Ensured compliance to industry and legal norms
  • Improved relationships with customers and suppliers
  • Optimized IT system
  • Eco-friendly initiative

Different Types of Invoices: 5 Essentials for Small Businesses

Here are the five essential types of invoices that every small business needs.

1. Pro Forma Invoice

A pro forma invoice is different from a regular price quotation in that it is a binding agreement. However, the terms and conditions of the sale are subject to change. They’re helpful in streamlining the sales process by minimizing back-and-forth post a sale going through, as all mentioned terms are agreed upon by all parties involved.

It, therefore, is a document of good faith estimate to prevent the buyer from incurring unforeseen and substantial charges upon the finalization of a transaction.

The purpose of the pro forma invoice is to provide the buyer with an exact sale price. This invoice includes estimates of fees or commissions, applicable taxes, and shipping costs, if any. Businesses from almost every industry use pro forma invoices to complete their internal purchase-approval process.

A business may send a pro forma invoice either prior to shipping the products or at the time of shipping them. While the invoice does contain the exact cost and the details of the sale, it is not considered an official demand for payment. There are no guidelines in place that dictate a precise format of a pro forma invoice. It may or may not be similar to other commercial invoices in its presentation.

Example:

You may have visited a designer boutique and agreed to the price of a garment on a pro forma invoice. The designer will deliver the garment once it is ready. You will pay the designer once the invoice is received. The final amount on the invoice will be the same as or around the same amount as mentioned on the pro forma invoice.

2. Interim Invoice

An interim invoice allows breaking down payments for a huge project into multiple small payments. The time of making the payment corresponds to the completion of a predetermined portion of the project. This type of invoice covers that amount of money and helps with regulating cash flow for large-scale projects.

Big projects make higher expenses in terms of material, labor, and additional operating costs. Interim invoices help small businesses manage their expenditures when undertaking high-volume jobs. You need not wait until the completion of the project to receive payments. You can use the money received from interim invoices to pay off some of the costs you incur.

This kind of invoice is commonly used when you want to post multiple invoices for a client job.

Example:

You may perform some accounting work for Johnson HVAC technicians. You might start the work in January 2018 and estimate that the job will be completed by December 2018. You decide to invoice the client $100 per month.

If you use interim invoice, you will have to post interim invoices for $100 for every month between January 2018 and November 2018, bringing the invoice total to 11, and the amount total to $1100.

Your time ledger shows $1500 of staff time. The interim invoices will show 11 different posting of $1100, thereby reflecting a net WIP balance of 400. The interim invoices will show as “credits on account” and will not be coordinated with any amount of time.

By using interim invoice, you have the advantage of being able to see all staff posting that have not been billed and all the invoices sent to the client so far when November ends. You will also be able to view the current WIP balance owed to you, which may help you make a more informed billing decision.

Once December arrives, you complete the job and are ready to bill the client. You see that you’ve spent $1500 on staff and have invoiced the client $1100. Consequently, you may decide to invoice the client $1800, thereby making a profit of $300. You can also reduce the client’s WIP and clear all posted interim invoices.

For this, you will need to post a final bill of $700 ($1800 less $1100 is $700). You can post a write out to the value of $1500 as that would be the current balance, and your aim is to get the value down to $0 ($1500 less 0 is $1500). The final bill is used to finalize (or clear) all interim invoices posted to the client’s account so far.

3. Past Due Invoice

A past due invoice serves as a reminder to the client that they haven’t paid up yet and should act to settle the due payments. Sometimes, client fail to pay you in accordance with the due date on the final invoice. When this happens, you may send them a past due invoice immediately after payment becomes late.

The main purpose of a past due invoice is to remind clients that their payment due date has passed. When preparing this invoice, make it a point to mention all the information from the final invoice, including penalties that late payments will attract.

Example:

You want to overlay your driveway, so you buy large quantities of gravel and a couple of pallets from a hardware store. The purchase agreement mentions a payment term of two weeks from the delivery date.

The hardware store delivers the supplies the next day, thereby completing its contractual obligation. It now has the right to collect the purchase price from you. In this way, a debt relationship is established, with you as the debtor and the hardware store as the creditor.

If the debtor does not provide the contractually agreed upon payment before or by the due date as mentioned in the agreement, then the creditor can demand it up front.

4. Recurring Invoice

Issuing a recurring invoice makes sense when invoicing for ongoing services. It is most suitable for payments of the same amount, like a subscription.

When you set up recurring invoices, your invoices get sent to your customers automatically. You need not bother with setting reminders or copying data from an old invoice to a new one every time you need to send them out. This arrangement allows you to focus your time and attention towards other strategic business activities while your invoicing takes care of itself.

If the product or service you provide requires you to send out invoices with the same details to clients on a regular basis, you need to use recurring invoices. A few types of businesses that use recurring invoices are:

  • Service providers, like plumbers and electricians, who bill for a fixed number of working hours every month.
  • Providers of monthly service packages. For example, a digital marketing agency that provides a set number of content and implements SEO services for its clients.
  • Providers of maintenance plans for products. For example, technology companies that digitize company processes with the help of their trademark tools and technologies. Integration with legacy systems and constant updating of business-critical applications will need their monthly support. Another example is that of a gardening service provider that attends to the client’s garden on a weekly basis.
  • Providers of educational material and online training resources such as long-term online learning and refresher courses offered by educational and training institutes.
  • Providers of services that require membership or subscription. This could be a one-year subscription to a magazine or fees for a 10-year club membership.
  • Software providers who charge a license fee every month to allow the use of their products.

Typically, when a recurring invoice is used, customers avail services at regular intervals without performing any additional action. When the agreed-upon term ends, the customer can either extent or terminate the alliance.

5. Credit Memo

A credit memo or a credit memorandum is a document that is issued by the seller of products or services to the buyer to decrease the amount the buyer owes to the seller under the terms of an earlier invoice. Typically, the credit memo clearly mentions the reason for the amount stated on the memo that has been issued. This comes in handy at the time of gathering information about credit memos and figuring out the reason for their issuing by the seller.

This document is commonly issued when the buyer wants to return purchased goods to the seller, or when there is a pricing issues, a marketing allowance, or any other reason where the buyer should not pay the seller the amount as mentioned in the invoice. The seller makes of a note of the credit memo as a reduction of the accounts receivable balance. The buyer, on the other hand, notes it down as a reduction in the accounts payable balance.

When using a credit memo, the seller will do well to review the open credit memos at the end of each reporting period to check the suitability for linking to open accounts receivable. When this is done, it lowers the average amount of outstanding invoices, and can also decrease payments to suppliers.

In case the payment from the buyer and seller is pending, the buyer can use the credit memo as a partial offset to the invoice-based payment to the seller. But if the buyer has made the full payment as mentioned on the invoice, he/she has can use the credit memo to either use the credit memo to offset a future payment or demand cash payment in exchange for the memo.
An internal credit memo is created when the buyer is not sent a copy of the invoice. This is done when a business is writing off an outstanding receivable balance.

Example:

You purchased some clothes from a fashion clothing store. The store’s return policy stipulates that returns will be accepted within 15 business days from the date of purchase. Their policy also mentions that reimbursements will be made through store credit only, and not by cash.
One day after the purchase, you realize that one of the garments you bought has a hole in it. So you decide to return the product. The store manager informs you that they will accept the returned product. The manager then proceeds to create a credit memo because the clothing store will need to reduce a previously issued invoice to compensate for the sold damaged garment.

Once the memo is issued, your account at the fashion clothing store will be credited with the amount you paid for the item you want to return. You can then use this positive credit to either exchange the damaged garment with a proper one of the same model or buy a different garment altogether.

Conclusion

The modern marketplace is extremely competitive and small businesses need to be prepared with the best systems and software to stay competent. Business need to not only attract new clients, but also retain them if they want to grow and compete in the market for the long term. Efficiency is the name of the game, which is why it is crucial that small businesses find ways to maximize their results while saving their resources. Factors such as improving productivity and making dealings convenient for clients matter. An online invoicing system for small businesses is the key to achieving this. An improved invoicing process will ultimately help scale your business by bringing about enhanced cash flow. Gone are the days when creating invoices on paper and excel sheets were enough for efficient invoicing. Modern business processes demand the efficiency and the multiple benefits that only cloud-based software can bring to the table.

Is your small business equipped with a state-of-the-art invoicing system that caters to all its unique needs? Do let us know how it has helped your business in the comments box below.

The In-Depth Guide To Selling Your eCommerce Business

After building a successful eCommerce business, you can look back and see the massive amount of time and money it has taken you to get to this point — the point where you are generating profits and enjoying more free time.

However, after building a successful business, many entrepreneurs feel like there’s always something more, encounter a situation in their personal lives that requires a quick cash influx, or have gotten burned out from the incredible amount of work they’ve gone through.

When that happens, it may be time to sell the business you’ve built.

Whether you’re looking to focus on a new, bigger project, you want to put out fires in your personal life, or you need the time (and money) to step back and figure out what your next move is, selling an established eCommerce business can be incredibly profitable for you.

To make a profitable exit, and get the most value from the sale, you’re going to need to step out of your entrepreneur shoes and step into an investor’s shoes, since they’re the people who are going to dictate how much money you’re going to get out of the deal.

Figuring out a baseline value for your store is the first step, and can be one of the hardest things you’ll do — outside of mentally preparing yourself for letting go of your business.

At the end of the day, no two businesses are exactly alike and there is a wide range of variables that go into figuring out how much your specific business is worth.

That means figuring out what investors may be willing to pay for your business can be difficult to do.

At Digital Exits, we’ve made it our sole mission to understand what investors are looking for when they’re ready to buy and how business owners can implement those factors into their business.

To help you wrap your head around the entire process, you need to understand one critical point. The reason investors are willing to buy your business is because that business will generate an income for them. Nothing more, nothing less.

Those investors want to turn a profit, and the first question they’re going to ask themselves when they’re thinking about buying the business is “how long is it going to take me to earn my investment back?”

In order to get the highest sale price possible, you’re going to need to look at the business like an investor will look at the business, and then address the areas of concern that investors are going to be digging into in order to knock your sale price down.

You can start by answering the following questions:

What do your annual sales numbers look like?

This is going to be the biggest factor that determines how much your store is worth. Some investors will look at your average yearly sales over the past 3 years, while others are going to look at the last 12 months.

The key here is to show stability and have sales numbers that are easy for your investor to verify. If the numbers can’t be easily verified, your investor will assume that you’re hiding something and then think that you’re hiding other things, causing the deal to fall flat.

How much profit is generated from those sales, annually?

Your annual net profits is the meat and potatoes of your store. While having a high sales volume is attractive for most investors, if your profit margins are slim or near non-existent, it’s going to be hard to get an investor to move forward with the deal.

Before you start listing the business for sale, you’re going to want to make sure you’ve increased your profit margins as much as possible, either by negotiating better terms with your suppliers or by cutting expenses. Then, give those new changes time to stabilize.

Is your store currently growing?

Some entrepreneurs make the mistake of trying to sell their business when the traffic and sales have begun to decline. This usually happens because they are burned out and can no longer give the business the attention it deserves.

While some investors still may be interested in buying the business based on past performance, you’ll need to go into the process expecting to validate why the business is declining, and accept a lower valuation as a result.

Investors want to see growth, or problems that can easily be fixed that will result in growth down the line.

How are you driving new sales?

Are you currently running different promotions to drive new sales to your store? Have you tapped into influencers in the past that are still sending sales to your store? Or are you running paid advertising campaigns?

The methods you’re using to generate sales will affect what the store is worth to an investor. The more work they have to do to maintain the sales volume you’ve established, the less they’re going to be willing to offer to buy the business.

This is even more true if your sales have begun to decline and you don’t have plans in place for recovering the lost sales volume.

Can you sustain the new growth?

If you are driving new sales to the store, do you have the capacity to handle those sales? Do you have the inventory and shipping solutions needed to handle a new influx of customers? Do you have the support channels in place to handle problems as they come up?

With the new sales that you’re driving, can the increase be sustained on its own? Or will your investor need to put in more time and money to maintain the growth?

Answering this question and having plans in place to not only handle the new growth, but to sustain that growth into the future, your business is going to be more attractive, and worth more money to an investor.

How are you acquiring customers?

Which channels are you using to acquire new customers? Can your investor take over those sales channels after they buy the business from you? Do you have systems in place to maintain a relationship with those customers that your investor can take over?

Bringing in new customers is only a single part of the bigger equation. How you’re fulfilling those customer orders, providing service to those customers, and making sure you can bring them back to your store again and again are other areas investors will look at.

How much are you spending to acquire customers?

Paid advertising is a huge marketing channel for eCommerce stores, but one that cuts into your monthly net profits — which investors use to determine your store’s true value.

You’re going to want to have detailed statistics about the traffic you’re buying, how much you’re spending, where that traffic is coming from, where it is going, and, most importantly, how it converts into a new customer when it lands on your store.

Be prepared to turn this information over, and make it easy for your investor to verify.

How are you positioned in the market?

Your competition and how you’re able to stand up against them is another area that your investors are going to be looking into. That means you need to examine how you’re positioned in your market and be able to back up your claims during the negotiation process.

Identify who your competition is, what they’re doing well, and where they are weak. Then look at your own business and figure out your own strengths and weaknesses.

Play on your strengths during the negotiation process, but be honest about your weaknesses. Go a step further and develop strategies to overcome your weaknesses, if you want to ensure you’re prepared for the questions your investor will ask.

Is your business relatively automated?

It’s already been mentioned, but this question is important enough to mention again — how automated is your business, and how much work is your investor going to have to put in to sustain the business that you’ve built once they take it over?

Investors aren’t looking to create a new job for themselves, especially if that job is going to cost them high 6-figures or into the 7-figure range.

If there are certain parts of the business that you have to be actively involved in, you’re going to want to look into outsourcing those parts of the business. Likewise, if there’s something you’re doing that can be handled by an automated service, it’s worth investing in that service.

Your investors will appreciate a relatively hands-off business.

Do you have systems and processes in place?

This is similar to automating parts of the business that you’re able to automate. Rather than completely automating certain aspects, though, it may be worth your time to document the process and put systems in place that make it easy for your investor to outsource.

Remember, the ultimate goal for your investor is going to be to take over a business that they do not have to be actively involved in, or are able outsource the tasks that they don’t want to do to other people.

Part of being able to outsource certain tasks means understanding how to do, and how to train, the people coming in to handle those tasks. That’s where documentation and processes make their life easy, and make it easy to outsource what they need to.

Once you have unlocked the answers to each of those questions, you can begin placing a value on your business.

To get a general idea, you’re going to want to look at how much other businesses have sold for, and compare your own model to their model, finding strengths and weaknesses.

For the most part, an eCommerce store that doesn’t have significant issues with their model is going to sell for around 2.51 times the yearly net profits.

This means that if your eCommerce store is generating $89,000 in profits per year, you could apply the 2.51 multiple to the profits to find a final value of $223,390. This is a starting point in the negotiation process between you and your investor.

To help you navigate the negotiation process, there are a few things you’re going to need to do.

● Ensure that you have all the necessary paperwork. Your numbers need to be honest and accurate, because these are the numbers your investors will use to validate your asking price.

● Make sure you have systems and processes in place. Ensuring that the business is running efficiently after you leave is a huge selling point that you can use during negotiations.

● Make your products and services different. Setting yourself apart from the competition and ensuring that the business isn’t a commodity that can be easily replaced is critical if you’re asking for a higher valuation.

● Work with a professional broker. If you have never bought or sold a business before, you could easily get worked over during the negotiation process. Brokers help you keep your own interests protected and can get your offer in front of more investors than you can on your own.

● Clean up the business. If there are problems that you’re aware of, take the time to fix those problems and then let enough time pass for those problems to stabilize. If you notice problems, your investors will, too, and will use those issues to lower your asking price.

You can see from what I’ve laid out here that selling a profitable eCommerce business isn’t necessarily a black and white affair. There is a lot of intricacies that goes into finding the real-world value of a business.

However, if you answer the questions given here, and address any areas of concern in your business, getting the maximum asking price from selling your eCommerce store becomes a reality instead of a distant dream.

This Is How You Prepare Your Home For Winter

Some people live for the summer and the warm weather it brings. Others cannot wait until the weather starts to cool in fall. Regardless of how you feel about it, the weather will soon start to get cold. Winter really is coming.

winter

That means you need to do a little work now to prepare your home for the cooler months. Doing so can save you money on heating, but it can also make sure you don’t have expensive and annoying repairs come spring. You should start by looking at the outside of your home.

Preparing The Outside Of Your Home

In any season, leaky roofs or doors are a problem. You pay good money to control the temperature of your home, and these gaps make it more expensive. That’s why neamb.com recommends taking a look at your roof. Any shingles that are loose can easily come off with a big snowfall. Along the same lines, check your doors and windows for drafts. If there are any, use silicone caulk outside to seal them up.

Because the weather will get seriously cold in winter, you also need to prepare your outside faucets. Start by removing garden hoses and storing them for spring. Then check the faucets themselves. Look into the spout for a metal stem. If you see one, your faucets are likely frost-free and don’t need anything. If there is no stem, you should shut off the water completely to the outside or install a sillcock with an integral vacuum breaker.

Closing Down Your Pool

Speaking of water, you have some extra work to do if you own a pool. Whether it’s above ground or not, you will need to winterize the pool so you can protect it. A treated pool is much less likely to give you problems next summer when you just want to get in the water.

In The Swim has an excellent page of winterizing kits for your pool, including:
● Winter “pills” that have a mix of enzymes and clarifiers to keep the water clear through winter.
● Covers for the whole pool and pumps to remove excess water from the top of the cover as the snow melts.
● Solar blankets that also act as covers.
● Patch kits for covers that develop small holes due to the weather.

What To Do Inside Your Home

Now that you’ve taken care of the outside and the pool, you need to look inside your home. Popular Mechanics has a great list of interior winterizing tips, such as:
● Changing your furnace filters so your heated air is clean.
● Turn any ceiling fans to reverse. (This pushes rising hot air back down to your level.)
● Consider installing storm doors and storm windows, as these can increase your energy efficiency for more comfort and lower costs.
● Hire a certified HVAC maintenance crew to make sure your furnace is working correctly.

If you have two homes and are leaving your summer residence, you should read this checklist from Travelers about preparing your home. Not only should you make sure your home is free of drafts and has a maintained furnace, you also need to drain your water pipes so they don’t freeze while you’re away.

Winterize Now To Save Time & Energy

The thing about fall and winter is that they can be here before you realize it. That’s why it’s so important to start preparing your house for cooler weather while it’s still warm. Check the outside of your house for problems with your roof, windows, and water system. Winterize your pool if you have one, then do some maintenance on the inside. This can go a long way to making sure you’re warm this winter.

How to overcome Financial Problems

How to overcome Financial Problems

How to tackle financial Problems
We have all been there. Financial woes and challenges happen to everyone at some point, and the stress and worry can be overwhelming. The most common financial problems and difficulties are:

Cash Flow
Economic Cycles
Funding
Unforeseen expenses
Poor financial management

Lets look at each in turn.

Cash Flow.

Keeping track of what money is coming in and going out of your business is essential. Remember, profit isn’t the same as cash flow. Your business may generate a large profit margin and you may experience strong growth, but if your money is all tied up in stock you may not be able to pay your suppliers.

Send out invoices promptly and be quick to chase overdue bills. Set out clear payment terms with suppliers. Get to know your customer payment dates and don’t ignore irregularities or delays — a poor paying customer might be about to go bust.

Efficient stock management. This is just as important as managing cash flow. Regularly reconcile your stock records. An efficiently managed stock control system will have a positive impact on your cash flow because you will never be holding too much stock, or have all your money tied up in it.

Stay on good terms with your lenders and keep them informed of any unforeseen outgoings or changes in forecasts. By developing a good relationship, based on trust, with banks and lenders, they’ll be more likely to treat you favourably should your business need future financial assistance.

Economic Cycles

Planning for cycles is largely a matter of recognizing that they exist. This may mean not assuming that the current good times will go on forever.

Plan for tougher times by limiting the costs you add to your business. In particular, be wary of paying higher recurring expenses such as rent.

Entrepreneurs tend to take on unnecessary expenses when times are
good, but this can sink you if a recession strikes. Look out for overly lavish expense accounts, over-reliance on high-priced professional advisors, products that don’t carry their weight, and even marginal customers you’d be better off without. Trimming these costs when times are good will help your profits now and may make the difference between success and failure when the cycle turns the other way.

Also think twice before adding expenses that may be hard to cut, or even cost more to cut than they do to keep. Chief among these costs is people. It can be emotionally as well as financially painful to lay off workers in the event of an economic downturn. And the costs for severance pay, unemployment insurance, outplacement and retraining may also be steep.

Remember: Even if your income statement and balance sheet are strong now, you have to practice cost containment to be ready for the next recession.

finance

Funding

Firstly I need to point out that “The best finance is no finance” however few of us have the luxury of no Finance.

Bank Loans
Normally this is the first place the young entrepreneur thinks of. Since the Financial Crisis in 2008, Banks lending standards have got a whole lot tougher. However some Banks have set aside funds for Small Business Lending. It is always worth contacting them, and compare their Terms and Conditions with other forms of finance.

Equity Funding
Is the process of raising capital through the sale of shares in an enterprise? It can be anything from a few thousand pounds from Mum and Dad to billions from giant “initial public offerings”. The concept is the same. You give up a part of your company in return for cash. Giving up part of your company may be a big ask but being too possessive can kill an idea before it has taken off.

Venture Capital
Is a type of private equity, provided by firms or funds to small, early-stage emerging firms that are deemed to have high growth potential in return for Equity or a stake in the ownership?

Friends and relatives
Can be a controversial method. Always consider that you are risking their financial future and jeopardizing important personal relationships. Offer up a strong business plan. This will show them that you are taking their money seriously, and always make them aware that they could lose everything!

Angel Funding
Or seed investor, is an affluent individual who provides capital for a business start up, usually in exchange for convertible dept or ownership equity.

Crowd Funding
Is the practice of funding a project or venture by raising monetary contributions from a large number of people. Debt-based crowd funding, also known as peer to peer “P2P” is where borrowers apply on line, generally for free, and their application is reviewed and verified by an automated system. Investors buy securities in a fund that makes the loans to individual borrowers. Investors make money from interest on the unsecured loan, the system operators make money from taking a percentage of the loan and a loan servicing fee.

In the years that I have grown my own business www.zzap.com I have learnt that in order to attract other peoples hard earned cash make sure you can tick each of these boxes:

1.Be an expert in your product and the market you are attempting to enter.
2.Don’t just follow the latest Fad. You need to show passion for the idea \ product, rather than just jumping on a bandwagon.
3.Keep the investors up to date. This is often overlooked.
4.Add experience. Surround yourself with people you trust who can fill in the gaps. No one knows it all.

There are many ways to raise capital but they all come at a price. Taking calculated risks is part of being a businessman. Be truthful with yourself, do your homework, know your market. Before anyone will invest in you they have to be convinced that you are a good bet. You will only convince them if you truly believe in yourself. You may be interested in my article “Learn your own way. The most underrated key to success.

Unforeseen expenses

Office Space
Before renting office space or purchasing property, think about how much space you need now and what you’ll need once your business starts to grow. Does your business require more than a home office can provide? Will temporary office space work?

Equipment & Maintenance
Don’t buy the latest model if you don’t need it. Remember to include basic office equipment in your budget, items like computers, copier, paper, scanner, desks and chairs. Use second-hand and discount sites such as eBay, Freecycle, Gumtree and surplus sales.

Employee benefits
Provide perks. It’s more cost-effective to retain good employees than recruit new ones. These perks don’t have to be pricey; benefits such as flexible schedules, telecommuting and casual dress codes can do a lot to boost retention.

Insurance
At a minimum, you need both employer liability and public liability coverage. It’s also a good idea to carry insurance for negligence, property, illnesses and injuries.
Negotiate with your insurance providers. Periodically review your coverage to see if it still meets your business needs. Talk to your provider and other insurers to get the best rates and best coverage.

Poor Financial management

Specialists can save you money and time. Legal professionals can untangle red tape and advise on legal challenges. Accounting specialists can translate tax codes, help maintain accurate payment and inventory records, and find grants to help fund your endeavours. Although expensive they can make that all important difference.

In conclusion

If you want to run a successful business then there are times when you will take calculated risks. This can lead to success or ruin. But it doesn’t have to be that way. You must realise that there is almost always a way out, and before you sink into deep depression you must explore every avenue. I hope I have shown you how to overcome some of financial problems and difficulties and hopefully ease your stress. One size does not fit all. But, by taking a positive approach there is every chance you will succeed.

How to Take the Stress Out of Tax Time

tax-releax

As a business owner, the last thing you need are more tasks on your to do list. And yet, that’s exactly what tax time presents because as we all know “doing your taxes” isn’t just one task, it’s a bunch of little tasks that add up to a huge pain. If you’re a small business owner, a piece of you is probably already starting to dread that impending April 15th deadline. But here’s some good news: While eliminating all of your tax time stress probably isn’t possible, it is possible to mitigate some of it. Here are a few tips:

Start early. All the little tasks required for preparing your taxes aren’t going to get any easier or any fewer in number the longer you procrastinate. If you know you’re going to have to go on a search and find mission to gather all the paperwork you need, then start now. If your records are well kept via your own filing system or with the help of accounting software, go ahead and make sure you can easily find everything you’re going to need to turn over to your tax preparer. Starting early, when there’s no need to rush, will keep your stress to a minimum and reduce the chances of making a costly mistake.

Make the most of helpful tech.As an employer, there are a lot of tax forms you have to deal with for each of your employees. From W-2s to 1099s, filling out and managing all these forms can be a real headache. Thankfully, there is extremely helpful W-2 software available today to help you manage all these forms. In addition to making filing your employee information easier, much of the available software updates automatically in order to account for new tax requirements, such as the Affordable Care Act Tax Provision.

Hire a trusted tax professional.Filing your taxes is a tedious and unforgiving business. Even if you’re a math whiz interpreting the many forms you’ll need to fill out can be a challenge if you aren’t well-trained in tax prep. There is certainly no shame in hiring a professional to prepare your taxes for you. To find the right person for your business, ask some of your fellow business owners who they use, check out Yelp reviews, and always interview potential candidates. When you know you can trust and rely on your tax preparer, tax time becomes a little easier.

Set aside some time for relaxation.Tax time doesn’t have to be all work and no play. Sure, you might have a to spend a couple extra hours in your office here and there to make sure you’re all set for April 15th, but be sure to offset it with some “you” time. Get a massage. Go for a jog. Have a little dance party for one in your office. Regardless of the activity, do something you love to put tax time out of your mind for a bit.

Yes, tax time is stressful, but when you take the right steps early in the process, you can do a lot to reduce your stress load. April 15th may seem far away now, but it will be here before you know it. Start taking steps to get ready today so that you can be less stressed down the line.

Features of Online Invoicing Software that are Lifesavers for Your Business

Sending out invoices and monitoring which have been paid is such a hassle. Not to mention, if you make a mistake or lose track of an invoice, your business loses money. Online invoicing software is the solution to this old business problem. It allows you to automate invoices entirely online, so you can say “goodbye” to the paperwork that gives you a headache. Here is an overview of the typical features and benefits you will enjoy in online invoicing software:

#1 Cost Reduction and Speedy Payments

Online invoicing software reduces business costs and speeds up payments. You save time and money by handling your invoices with this software because you don’t have to go through the hassle of creating and mailing the paperwork every month. No paperwork means less clutter in your office and fewer documents to shred. You don’t have to wait for customers to receive the mail and send payment either. Customers can immediately pay you online.

#2 Easier Tax Filing

Another great feature of online invoicing software is easier tax filing. The software automatically applies tax codes to invoiced items, making your life easier. Your accountant will be able to access this information easily as well. If there are any errors, your accountant has the ability to correct it within the software.

#3 Professional Templates that Reflect Your Branding

Many online invoicing software provide a variety of custom templates, so you can reflect your branding in invoices. This allows you to remain consistent and professional. You can also adjust the template for specific clients when necessary. For example, you may need to set credit limits for a particular customer. Or you may need to adjust it based on the client’s currency, region, or language.

#4 Notes and Reminders for Clients

Sometimes you need to jot down notes about a client in regard to payment. Doing this by hand takes more time and can become lost. Online invoicing software allows you to set notes and reminders for clients, which is more convenient than keeping track of it by hand or in another document. You’ll have all the necessary information conveniently located in one safe place online in the cloud.

#5 Multiple Ways of Getting Paid

You can accept a plethora of payment methods with online invoicing software, such as PayPal, bank transfers, and credit cards. With online invoicing software, customer payments are automatically logged for you, so that you save time and improve accuracy. You can quickly view which payments you’re waiting on with the software as well, which saves you the time of manually searching for a missing payment.

#6 Integration with Other Business Functions

Some online invoicing software provides integration with other business functions to further streamline your work. Which business functions are integrated varies from software to software. Choose the one that best suits your needs. For example, our online invoicing software offers project management and time tracking tools. If it makes sense for your business, then it may be the better choice in invoicing software for you.

Conclusion

Not having an efficient system in place for sending and managing invoices is a major reason some small businesses experience cash flow problems. Online invoicing software makes your life easier in many ways, including eliminating a good chunk of paperwork, improving organization of your invoices, and increasing the speed at which you are paid. You will have more time and money to spend on more interesting aspects of your business than invoicing. Our online invoicing software, CloudBooks, offers all of the above benefits to help you stay on top of your business’s earning and spending.

Contact us for more information on how CloudBooks can help your business save time and money while automating your invoices.

6 Reasons You Should Use Cloud Accounting Software When Freelancing

6 Reasons You Should Use Cloud Accounting Software When Freelancing
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Freelancers are forced to wear many hats in their day-to-day operations. Although some freelancers do hire and outsource the tasks that they are not too familiar with, many opt for handling these aspects of their business on their own. For this reason, we recommend that all freelancers look toward some type of cloud accounting software to help them deal with their day-to-day bookkeeping and ensure that they are up to date come tax season. There are many reasons why this might be the right idea for many one-man-team freelancers, or even freelancers that already are outsourcing some of their daily tasks.
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