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When developing a small business plan, prospective business owners must address everything from the business structure to financial projections and a competitive analysis. You also need some thought about your overall small business strategy. Once you launch, you get buried in details like hiring, inventory, and customer service.
In this avalanche of details, it’s easy for a business owner to overlook an essential small business tool: invoices. While almost everyone knows about these financial documents, you must make a conscious effort to implement them. It’s worth the effort, though.
Not sure what you get out of invoices, keep reading for five key benefits this basic company tool provides.
1. Encourages Payment
Everyone is busy with either their own business, jobs, or families. All that hustle and bustle makes it surprisingly easy for people to forget that they owe a payment. When you send an invoice, it serves as a clear reminder that a payment is due.
In many cases, the recipient appreciates the reminder.
One of the nice things about invoices is that there is no standard form for them. That means you can design a custom invoice that helps solidify your branding. For example, you can make your logo a prominent feature at the top.
You can use your business name and brand colors for a header on the document. You can even drop your slogan onto the invoice. All of that reminds the customer about what you’re all about.
3. Legal Benefits
You can also secure some legal benefits from the invoice. For example, let’s say that you’ve tried repeatedly to get a delinquent payment from a customer with no luck.
An appropriately dated invoice with a clear breakdown of products or services helps you establish when the debt first occurred and for what. Copies of follow-up invoices can support your position that you made good faith efforts to collect.
4. Keeping Your Finances Organized
Invoices become part of your accounts receivable. That lets you track payments and understand where financial shortfalls are happening. It also lets you initiate collections in a prompt fashion if the payment lags too far behind.
Invoices send a clear message to your customers that you run a professional business. You track your work or products and provide written accounts to your customers about those goods are services. That professionalism can actually reassure customers about working with your business again in the future.
Benefits of Invoices as a Small Business Tool
As the above shows, there are clear benefits to using invoices as a small business tool. One of the most important benefits, of course, is that it helps encourage payment from your customers. The faster and more reliably your customers pay, the better it is for your bottom line.
Invoices support your branding efforts and help keep your finances organized. It projects a sense of professionalism to your customers. It can even help support legal efforts if they become necessary.
Looking for more finance tips? Check out the posts in our Business section.