Ideally, you should send an invoice before payment to establish clear expectations and professional standards, but certain situations or industry practices may dictate otherwise; it's essential to consider the nuances of your specific business context.
Determining When to Send an Invoice
When concluding a project, it's essential to determine if you should send an invoice before or after payment is made. The strategic timing of an invoice can make a significant difference. While some businesses opt for pre-payment invoicing as a standard, others may find post-payment invoicing to fit their business model, especially for immediate transactions, like in retail.
Reflect on the norms within your industry when selecting the best time to send an invoice; what works well for others may also work for you.
Legal and Financial Implications of Invoice Timing
An invoice serves a dual purpose: it is a request for payment and a crucial part of your accounting records. It legally establishes the client's obligation and can act as a protective measure in case of payment issues. Clear invoice terms set the stage for a formal agreement, covering items such as the description of services, the total amount due, and the payment deadline.
Maintaining Steady Cash Flow through Invoicing
Cash flow is the lifeblood of any business. Timely invoicing can help maintain a healthy cash flow by setting clear expectations for when payments should be received. For example, invoicing immediately after service delivery can decrease the payment turnaround time.
Enhancing Client Relationships with Proper Invoicing
The invoice you send is a reflection of your business communication and ethics. A thorough, timely invoice communicates professionalism and sets the tone for your relationship with the client. Discuss invoicing early on to manage expectations and demonstrate transparency.
The Professional Way to Follow Up on Invoices
Professional follow-up on invoices helps in maintaining a cash flow without straining client relationships. Sending friendly reminders as due dates approach can encourage on-time payments. It’s vital to approach these follow-ups with tact and consider renegotiating terms if late payments become a pattern.
Use language in your follow-ups that reinforces the value you’ve provided, reminding clients of the mutual respect and understanding established from the start.
