Invoicing is a slippery slope that can quickly become a devastating liquidly nightmare. The easiest way to put a company in peril is to delay invoicing. If billing doesn't go out in a timely manner, cash won't come in. The solution is simple!

Invoice Daily!.

Numerous studies indicate quick receipt of accurate bills improves customer satisfaction any payment. Possibly more important is that timely invoicing helps reduce bad debt and increases the likelihood of receiving full payment within traditional remittance cycles.

Billing Practices To Avoid

#1. Don't wait to prepare and distribute invoices on the 15th and 30th of each month. This common billing routine is inefficient and dangerous. It artificially limits your cash flow by automatically delaying invoice cycles. Worse, firms following this model tie up their cash, credit lines, and artificially inflate Accounts Receivables. This is especially true for businesses  that incur labor and/or material costs up-front. Following this model results in your business providing customers with interest-free loans. That's not a smart business model.

#2. Avoid billing hardware/Materials and software/Labor costs on the same invoice. When a client signs off on a project, the next step is typically for the company to order or build the required hardware/materials. Companies sometimes wait to bill for that hardware/material when the deployment completes; this can negatively impact cash-flow, especially when multiple systems are deployed. Bill for the hardware upfront (i.e., the day it's ordered)! Better yet, accept a cash deposit before placing the order.

#3. Bill Daily! Waiting to complete billing tasks, even a couple days (even if you take great notes), opens up an opportunity for errors (that can damage your invoicing credibility). Also, you are still limiting cash flow. Worse, you're creating delays between the time service is provided and a bill is received. The longer that gap, the higher the likelihood that payment problems could arise.

#4. If possible, allow the project manager to complete the invoice. Whichever engineer completes a project, that's the staff member who should enter the billing information. While there's nothing wrong with having a director or a supervisor review client invoices before they're mailed, unless the actual technician performing the service prepares the bill, it's quite likely that an additional service the client requested and received may go unbilled.

All things considered, it makes sense (dollars and cents) to distribute invoices daily as it benefits cash flow, improves client satisfaction, increases the likelihood of quick payment in full, and reduces the possibility of bad debt and liquidity issues.