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True Accounts Video Podcast

Invoices - Prelude & Finale (aka Prequel & Sequel)

March 24th 2007 Posted in small business, strategy, accounting, assets of your biz, income, helping clients

In Invoices Part 1, we looked at the essentials of creating and sending an invoice.

Here in Part 2 (Finale), the real fun begins!

Before you send an invoice, before you even start work!

You need to have good communication with your client before you do the work, as to how and what you expect to be paid and what they’re going to get out of it. If you don’t, misunderstandings inevitably arise later.

Now, depending on what you are doing, there may be legalities you may have to consider, for example, under the Trade Practices Act. You will have to get information and advice elsewhere about this as I’m not a lawyer.

Hone your acting chops

If you feel squirmish about the whole thing (you’re an artist, right?) sit down and work out a little script. Once you perform your routine a few times, it will feel more comfortable. If it doesn’t, just pretend you feel more comfortable!

It’s all about the expectations of the other person. It’s not fair to them if you don’t make it clear. Your script might go something like this:

“Fred, we haven’t talked about money yet. I charge an hourly rate of $xx. I’ll send you an invoice once a month (week/whatever), and you’ll have two weeks to pay me. Do you have any questions? I’ll confirm this in writing.”

OR

“Alice, we haven’t talked about money yet. I charge $xxx for designing a five-page website. Once you are happy with it and sign off on it, I’ll send you the files and the invoice. My terms of trade are strictly net 14 days. If you are happy with this arrangement, I’ll send you a confirmation letter. Please print out two copies, sign them and snail-mail me one copy.”

Make sure you have all their contact details.

How to deal with boring admin

Habit is everything.

Take a few hours and set everything up. Then put a recurring reminder in your calendar or Remember the Milk. I usually do my invoicing at 6.00 am on a Sunday morning, when I’m tired and uninspired. At least then, I’ve got it out of the way.

So you need to set up your paper trail. This might be simply a time-sheet folder ->invoice folder. If you use NETaccounts as your accounting software, you can upload and attach docs to transactions on a secure server and save a twig.

Next, set up your invoice template on your accounting software.

Keep cashflow in mind - it will help you sleep

Try to always think ahead. Time your work so that you can finish the job, get the invoice out and the cash in before you have to make that monthly loan repayment (or buy petrol for the car!).

‘Terms of Trade’ means how long you are going to give your clients before you expect to be paid. You might decide to allow 14 days, but if you’re dealing with a large organisation, they’ll have other ideas, like net 90 days.

Squeeze the money out of the client, but in a nice way

I get very annoyed and stressed when I get paid late.

If people have not paid you on time, it can be very stressful, which is not fair. But again, if you have a routine and a script, it takes the sting out of it. So here’s what to do:

Step 1: Before starting your invoicing, check your bank account to see who has paid. Then mark off those who have in your accounting software. Then send all who are overdue a statement and reminder. It’ll take 2 minutes once you have the routine set up.

Step 2: If they don’t respond with payment after you send the statement, follow up with a phone call. I find a light touch is usually all that is needed when dealing with individuals. If it’s a larger company, ask to talk to someone in the Accounts Payable Department. Just ask them if they’ve received your invoice and be prepared to send them another one if it’s still sitting on someone else’s desk awaiting approval.

Steps 3 - 99: Simple persistence will work most of the time. Don’t get too heavy-handed because the courts take a dim view of this. I’ve been paid all but one time. But I’ve lost a client once simply from sending regular statements.

So that’s all there is to it.  It’s just a matter of forming good habits.  Your bank balance will thank you for it.

Cheers for now,

Anne.

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Episode 1: Invoices: ‘How 2′, ‘Wot 4′ and ‘Y should I’

February 08th 2007 Posted in small business, strategy, accounting, assets of your biz, income, helping clients, cashflow

This episode is about how to raise an invoice. Next episode will be about how to manage the billing aspect of your client relationship, both before and after sending the invoice.

Windows Media Player version

Quicktime Enormous version which is good for the screenshots, not so good for my webcam shots!

Quicktime Regular version

iPod version

Non-iPod mobile phone version

If you’d like a Flash version, visit my Aussie site at trueaccounts.com.au.

Before going into the detailed shownotes, here’s our in-house wildlife of the week:

Pretty cute lizard

This video podcast shows how to create an invoice in NETaccounts. I like NETaccounts because it’s fully integrated, ie. it’s a full accounting package and you don’t have to import invoices in from another source. It will save you or your accountant a lot of time if you don’t have to put two or more systems together.

Here’s a good definition of invoice, and here’s the sample used in the video:

croporama2.jpg

What info should be on your invoice

  • Date of the invoice: So that the due date can be calculated
  • Invoice number: Helps identify the invoice, particularly if you are working for the same client more than once.
  • PO number: For years I didn’t know what that was! These mysterious bits of paper would turn up in the mail and I’d throw them out. Now I know it means Purchase Order. If you get sent one, make sure the PO number is included on your invoice to your client, otherwise their accounts department might let them pay you.
  • Due date: Decide what your Terms of Trade are. ‘Terms of Trade’ means how long you are going to give your clients before you expect to be paid. You might decide to allow 7 or 14 days, but if you’re dealing with a large organisation, they’ll have other ideas, like minimum net 30 days.
  • Contact name and details: Get ‘em all, not just the email address.
  • Invoice summary and details: I like to give my clients as much detail as possible. It makes them happy.
  • Income type: This has to be set up on your accounting system. Have a think about how meaningful the categories of income are for tax and reporting purposes. Don’t make too much work for yourself by setting up dozens of them.
  • Tax: Check with the local authorities and seek professional help as to your obligations. The example in the video is based on the Australian requirements.
  • Total amount due: Don’t make your client think. Put the total in bold.
  • Payment methods accepted: Again, make it easy for the client.

Check to avoid embarrassment:

  • All the details are correct on the final print out or pdf
  • The client has received the invoice after you’ve emailed it

Now go and get on with your life!

penny-photoresized.jpg

This excellent photo used in this podcast was taken by Penny Mathews, aka zoofythe jinx Thanks, Penny!

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Anne says: Hello world I’m here to help your small biz!

February 01st 2007 Posted in small business, strategy, accounting

The real head of the family

Hey you! No, not you with the floppy ears! You, the person with a dream to:

  • make a living from designing websites (or similar!)
  • run your own coffee shop (or similar!);
  • keep the farm going (or similar!); or
  • not be on anyone’s payroll ever again.

(Note I didn’t write: ‘Make squillions of dollars’. There are plenty of other sites that cater to that.)

I’m here with a warning and a message of hope.

Let’s get the yukky one out of the way first: 80% of small businesses fail in their first year. And of those that survive, 80% go out of business in their second year. Even if your business survives its hundredth year and grows to be huge, it could still go under. You know that.

Before I deliver the ‘message of hope’, let me tell you why I’ve started this bloggy vlog: I need to get over myself and start speaking out. You see, a few years ago, I did the bookkeeping for a new venture. Everyone was very excited, except for me. They got lots of seed money. They were going online. They rented prestige offices with a view of the harbour. They hired a big-time accountant. I knew my place - I was just the bookkeeper. I didn’t say or ask them anything.

I turned up one day and everything was gone. And that was the end of that dream.

If only I had spoken up, rattled cages, big-noted myself, talked out of turn, taken control of the whiteboard and made them listen…

If they were listening, I would have asked: Have you done the basics, like a SWOT analysis? How realistic is your 12 month cashflow forecast? What does the five year forecast look like? And on and on.

I want to stop being a passive bystander and tell you what I know. And ask you questions. And make you think. Because I’ve run out of excuses to keep my mouth shut.

I’m going to show you really simple things, like how to manage your cashflow, or how to analyse your strategy. It shouldn’t be only big businesses that use these tools. Even the local pizza joint would benefit by using them. If only they knew how simple and powerful these tools were.

I once heard the virtuoso cellist, Yo-Yo Ma say something like ‘I’m scared all the time, but I do it anyway’. So that’s what I’m going to do: Get over myself so I can help you get your dreams on track, so that you can be successful.

That’s it for now!

Anne.

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