Cash flow management can be a major challenge for self-employed consultants. If you work with multiple customers, you may struggle to balance the moving parts of getting paid.
In addition to tracking hours, you’re responsible for generating invoices, sending them to customers, corresponding with accounts payables (A/P) teams, and making sure your payments process without hiccups.
These logistics can be overwhelming for consultants without a finance background or accounting firm to help manage operations.
Once you identify what these steps need to be, you can automate your operations to be less of a cost-sink. Automation can help you avoid costly cash flow management challenges in your business.
Don’t build your invoicing process from scratch. Here are 5 tips for self-employed consultants looking to maximize cash flow and achieve stability in their businesses:
Invoicing Tip 1: Use Invoicing Software Sooner Rather than Later
Invoicing software can help ensure that your invoices line up with your books, that you’re tracking payments with accuracy, and that you have a real-time cash picture to manage your overall finances.
This capability will help you grow your business, run with more stability, and control how you get paid.
Read this guide on invoicing to better understand the role that software plays in accounting workflows—and how a platform like QuickBooks may help you build a template for invoice automation.
Invoicing Tip 2: Standardize Your Invoice Terms
One of the biggest struggles that consultants navigate is predictability over income. It’s never guaranteed when your customers are going to pay you. When you do know, there’s always a chance your customer forgets to pay—leaving you wondering if you can pay your bills.
One way to avoid this uncertainty is to use a schedule in your accounts receivables (A/R) process. Tell your customers your invoice terms so that you’re not left wondering.
Invoicing Tip 3: Make It Easy for Customers to Pay Your Invoices
Being self-employed, you do not have the backing of a larger company to guide your customers through the administrative process of making a payment.
One way to avoid these challenges altogether is to use technology to your advantage. Accounting software like QuickBooks gives small business owners—even teams as small as one—the technical capabilities that bigger organizations have on-hand to process electronic payments.
Credit cards, electronic payments, online checks, ACH, and direct wire transfers are some of the ways that you can accept funds from your customers. You can read more about online payment options in this article, here.
Invoicing Tip 4: Define Your Late Payment Policy
Bigger companies often have the resources to enforce their payment terms. These include legal, collections agencies, and the ability to charge interest when their customers fail to make payments on time.
In contrast, freelancers and independent contractors often feel powerless when enforcing their contracts. But you have protective measures too. Businesses of all sizes have ways to enforce penalties on payments that lapse.
Here some invoicing resources to help you build a late payment policy of your own:
- A Guide to Pursuing a Collections Agency – Learn when it’s time to send your customer to a collections partner, and weigh the pros/cons of doing so. This article also emphasizes ways to avoid ending up in collections, altogether.
- A Guide to Navigating Late Invoice Payments – Figure out what steps you should take to avoid delays in payments. Learn, at a high level, what you should communicate with your customer, ahead of time, to ensure smoother processes.
- A Guide to ACH Payments – Learn how to use ACH, one technique for processing one-time and recurring payments, can help you avoid payment delays. If you use QuickBooks for accounting, you get access to ACH payment options for free.
Invoicing Tip 5: Enable Mobile Payments
This option is ideal, especially, for consultants that process payments over the phone or visit customers on-site. A face-to-face meeting is a great time to work through administrative check-ins, especially if you need to get multiple logistical items squared away.
Use your phone to accept credit card payments, on the spot. Don’t push your customers or be aggressive. Rather, mention that you offer mobile payment and ask if it would be convenient to accept payment immediately.
If you’re a QuickBooks customer, you can enable mobile payments using your accounting software. There are ways to securely store your customer’s information, so you can make the process of collecting payment easier on everyone.
Process and automate as much as possible, so you can focus on the parts of your business that make you billable. Your accounting software will be your hub, so make sure that you build up capabilities that streamline how you get paid.
Hopefully, these invoicing tips will help you collect the cash you deserve, hiccup-free.