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Are You Shortening Yourself on Your Invoice

Guest post by: Merra Lee Moffitt

Article Overview: If you sell services, you may be working for free. When I’m working with self employed business owners who sell services, I nearly always find that they are not billing for some part of their work. That is, their invoices are missing what they could get paid. These lost billings can be the difference between making a living and having money for business and family security, expansion, and retirement.

Are You Shortening Yourself on Your Invoice

If You Sell Your Services, You’re Getting Paid Too Little

If you sell services, you may be working for free. When I’m working with self employed business owners who sell services, I nearly always find that they are not billing for some part of their work. That is, their invoices are missing what they could get paid. These lost billings can be the difference between making a living and having money for business and family security, expansion, and retirement.

Here are the major ways self employed professionals and contractors are losing money in their invoices:

Not writing down your worked hours daily. Lax time tracking leads to missing dollars on your invoices. If you are charging time and materials, your customer has already agreed to pay for this time.

Not billing quickly for work completed. When you wait a couple weeks to invoice, the ‘newness’ has already worn off of the wonderful job you did. This leads to customers questioning the invoice more often, leading to slower pay and sometimes challenging the invoice. Either way you’ve lost money.

Missed additional services. When you hear your customer say, “hey, could you fix this thing over here…”, that’s the sound of appreciation and opportunity. If you discuss the additional cost as soon as the customer makes the request, their most likely response will be “That’s fine.” If you wait till you later invoice, or worse yet miss it, you may be losing money on your invoices. Extras clients most likely knew they would pay for but now assume they won’t because you didn’t mention it at the time.

Multiplying these issues with employees. If you miss invoicing opportunities on our own work, I guarantee your employees are too. They follow your example, pay less attention to the money than you do, and generally get paid by the hour (sometimes even if the customer did not get billed for that hour.)

When my clients find, systematically reduce, and capture these lost billings they find the money to build operating reserves, pay themselves more, build expansion funds, and increase their retirement savings. This often happens without working extra hours. In many cases it also saves time.

So how do you do it? That’s the part that takes a little time, thought, and process. Here’s one new solution that I’ve seen work well. There’s an iphone application that allows contractors to quickly build quotes either while on the customer site or shortly thereafter, such as during a coffee break. This application quickly turns the quote in to an invoice after adjusting for the actual hours worked and materials used. Thus both the quote and invoice can be done quickly, usually the same day as the job. Since it is easy to add hours on the go, it can be quickly adjusted to reflect actual time spent. Finally, since it is simple to use as well as economical, employees can use it as well.

If you’d like to discuss profits through better invoicing or to find other ways to build your own profits without working harder so you can build a healthier financial future, give me a call.

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Article Tags: business owners, increasing sales, invoice, invoices, money, self employed business, work



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Different Types of Funding - Finance for business can be obtained through a number of different sources. Let's review some of those channels to help you decide what's right for your business needs: Grants There are over 930 different EU and UK grants and loans available from over 100 issuing bodies. This is the cheapest form of finance and an important part of the funding package that companies and individuals need. We can help you find your way through this maze. Technology Micro Projects: 50% of eligible costs up to £20,000 Research project: For a technical and feasibility study of an innovative idea for new technology 60% of costs up to a grant of £75,000. Development project: For development up to pre production 35% of costs up to a grant of £200,000 Developing an innovative idea: valuable for small companies and individuals at the start of a technical project: 75% of costs of hiring a mentor and consultants. Export To start exporting or moving into new markets grants of 50% of costs up to £20,000 each. Training and Education Knowledge Transfer Partnerships, Achieving Best Practice in Your Business, Investors in People Modern Apprenticeships New Deal for various grants. Environment BOC Foundation for the Environment: 25% to 50% of Project cost, typically £20,000 to £100,000 Clean up Fund: Emission reducing equipment up to 75% of cost Community Chest Fund: Up to £25,000 for projects near active SITA sites High Impact Fund: £150,000+ for larger projects near SITA sites Assisted Areas Regional assistance grants of between 10 and 35% for capital expenditure in less favoured areas of the UK. Loans Loans are an excellent source of finance if you have suitable security to borrow against or a reliable earnings stream. This needs to be planned and presented well to obtain funds. Credit cards Provides up to 56 days free credit if you play the game! Overdraft Banks are surprisingly supportive when presented with a well thought through plan and competent management. Bank Loans Lenders tend to look for a good business plan and security. Typically the loan is approved by a centralised back office function rather than the person you meet. Terms and rates depend upon the risk. Repayments can be very flexible to meet your specific needs. Mortgages These can include flexible repayment terms to meet your business needs. This can even be incorporated into your overdraft finance so that you have one flexible account for both personal/ business mortgages and overdraft Small Firms Loan Guarantee Scheme Up to two years trading: Up to £100,000 Over two years trading: Up to £250,000 However these are difficult to obtain and are a loan of last resort. Export Guarantee Scheme This is government backed insurance against appropriate export documentation. Mezzanine This is a halfway house between loan and equity. It can be an innovative way of raising funds for the more established business. Mostly for expansion capital. Equity This is not as easy as the papers would have you know. Only 1% of business plans received by Venture Capital Funds are successful. However, a good business proposition consisting of a strong demand for the product or service, management track record and a sound financial plan will enhance the chance of success. Business Angels These are high net worth individuals who are successful businessmen looking for investment opportunities. They can provide both time expertise and money. Typical investment size is £25,000 to £250,000 but can go as high as £2m for the right opportunity. Exit within 3-5 years. Venture Capital These are investment funds seeking high rates of return. However typically investments are over a million pounds. Some funds are targeted at lower amounts depending upon the sector and region. These funds are looking for exponential capital growth over 3-5 years. Asset backed finance This can cover machinery, sales invoices even sales orders. It can be a very flexible source of finance to the growing business Leasing This will cover your capital expenditure and spread the cost over a three to five year period. It is particularly useful if you do not have taxable profits to maximise your capital allowances. Sale and leaseback of a property you own is another good source of funds. Factoring Factoring offers a sales ledger administration and debt collection service. Up to 95% of an approved sales invoice is paid within 48 hours, quicker if required. Credit protection is also available to protect against a bad debt. The Factor will own and place a first charge over the book debts and they might also take other charges, depending upon the strength of the financial information. Invoice discounting Invoice Discounting can be Confidential or Disclosed; it depends upon the strength of the financial information. The service is the same as Factoring, except that the sales ledger administration and the debt collection is the responsibility of the client and not the Factor. Pre payment of the approved sales invoice is still up to 95% and the factor will still have a first charge on the book debt and therefore own the debt. This service can also have credit protection cover. All sales invoices need to be for a business to business debt, and some proof of delivery is generally required. Trade Finance This is funding provided against stock purchases, signed contracts and orders whereby the funder will prepay a certain percentage of the value Pension fund It may be possible to use your pension funds for a loan back to the business What do u think about it?


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