Create an Effective Past Due Invoice Template for Accounting and Tax

Past due invoice template for Accounting and Tax

eres Joe so I'm headed to pick up some material Petri and I just wanted to talk about cash flow and payment terms with your customers and not let them push you around some customers try and push that payment date out as far as possible kind of using you like a bank you know some of the larger companies won't even do up to 90-day payment terms more than that and the other us and the whole reason they're doing that is to benefit themselves right the longer they can take to pay you the better it is for them because that frees up cash for them right so they're essentially kind of using you like a bank account and you're not a bank your business right you're providing them services and you should expect to be paid for those services in the timely manner now on the flip side while it benefits them to do that and they're going to try and get not to happen the understand that it negatively affects your business and your opportunity to grow now it's kind of obvious that you want to be paid sooner than later especially if you're tight on cash but if you're getting you know plenty of work you like why why do I care about how long it takes me to get paid well it's not gonna affect us right you're wanting to grow your business okay and you can do all the work you can get but we all know it costs money to grow your business right you got to pay for employees equipment chewing space you got all these bills right so when you take on more work you got to put out money before you get paid for that work now if you're in a situation you can do all the work you can get you're gonna be limited by your cash flow okay so when you get paid for work you can take that money and put it back into your business be able to do more work okay now if you if you're getting paid over a long duration of time then it takes longer it's a ticket to get that money back to be able to put it back and be able to do more work with that money whereas if you get paid in a shorter period of time you can reinvest that money quicker and you can have that making you more money okay it just makes life a whole lot easier and you're not gonna have to go out and get a bunch of loans so basically by them putting the burden on you then you're gonna have to go get loans to do work so basically you're getting loans for them and you're paying interest on loans because your customers don't want to pay you in a timely manner the ideal situation is actually to get paid up front when you get the PIO but typically net 30 is going to be the way you're going to go that's for your routine customers that you know you have a relationship with you're going to do net 30 I take it a step further I do 2 percent 10 net 30 and that's because even though I'm getting dinged 2 percent if they pay within 10 days and that is worth it to me because the quicker I can get that money the better right so but you'll be surprised you know a lot that many customers take advantage of that which is a shame it'd be nice if they did but now let's talk about your new customers right ones you don't really have a relationship with yet especially if they're small people because you don't know how you know what their situation is and whether they're gonna be able to pay you're going to want them to pay upfront right they give you a Pio you want them to pay you do the work you turn it out the door you could even do a percentage down type thing put this percentage down I'll do the work and you pay me within 30 days sometimes you'll send out you'll get POS for net 30 and you'll send out the invoices but your customers won't pay on time they'll take a extra couple of weeks to a month to pay and they'll have all kinds of excuses for that but I think we all know we all cut checks all the time you can cut a check whenever you want you can when you get the invoice you can put that in your system and tell it when to cut that check or have somebody cut the check so the only reason they're really taking that extra time is because I think they can and really you know all you can do is bug them basically what I did on some of our repeat customers is if they take longer than 30 days I about a week after right I don't bug them right away but a week after 30 days I will say hey you know what's the status on this invoice I sent you and sometimes they'll answer back they're like oh you know we'll get that cut out right away we went recognized it or whatever and then sometimes it'll be like oh well you that's not really in our schedule right now so then I'll be like well I'll just decline the do work for you until you get caught up on your bills right so if they want to send me more work they're gonna have to pay for the work that's past due and then those customers that are fast to do that you know I don't have current rfqs from or orders from and in that situation one time I actually went down to their offices after a few weeks of them being past due and I said what you know what's the status on this and believe it or not I got a check cut the next day so you know it and you don't gotta be all upset and stuff about it it's just you know you deserve to be paid within those 30 days and if a customer doesn't that that's negatively affecting your business that's making it so that you're not able to do work and you're not able to make a profit right so yeah that's my two cents on it