Strengthen Your Cash Flow With Better Invoicing Practices

Feb 16, 2015

invoicingYou may not put much thought into your invoicing practices other than making sure an accurate bill is eventually sent to a client.

But by contemplating your invoicing practices further, you can improve the cash flow of your business. Strong invoicing and collection practices mean your business gets money sooner and holds onto it longer.


The first essential step to creating a strong invoicing practice in your business is to ensure you have standardized payment terms for your clients. You should have set billing practices for your business, which include your collections procedures. Collection procedures will state the penalties for paying late, such as interest payments, and what legal remedies you have the right to seek if the client doesn't pay.

Having consistent rules not only makes your accounting easier, it establishes credibility and fairness in your company.


Every contract you sign with a customer should specifically state the payment and collections terms so there is no question or ambiguity about when you're owed money and the consequences of the client not paying on time. The contract should state when any and all payments are due, which could include a retainer or percentages of the total bill throughout the project or any other payment structure you prefer.

Upfront Payments

If you choose to get a deposit or retainer from your clients prior to beginning an application, make sure that deposit goes directly toward the customer who paid it. One client's money should not go toward paying for another client's project.

Continual Invoicing

You also have to decide when you'll send invoices to clients, no matter how you bill the jobs. Some contractors perform their invoicing duty on one day a month, such as the 15th or 30th. However, this means you may end up with a backlog of invoices to get through. It could also mean you have to pay vendors and suppliers before you've billed clients.

A more beneficial way to invoice is as soon as a job is complete, which yes, may mean you invoice clients on a daily basis. The benefit to billing clients as soon as possible is that you'll bring cash into your business sooner. It also means you'll be able to track the clients who don't pay you on time.

For more details on managing cash flow, check out these CEDIA resources:



CEDIA blog posts are intended to provide general information and should not be regarded as legal opinions or advice.

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