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The other day I had a conversation with a person who explained to me that in her work they had a billing issue. I asked if the business was not making enough sales. On the contrary, apparently, they had more than enough work to safe the business in the short term. What was the problem then? The answer shocked me when I was told that apparently they forgot to bill some of the projects. Problems in the cash flow arose and this is how the problem was detected.

It sounds quite ridiculous, but this is a problem that happens sometimes in businesses when they finish a work, or deliver goods, and they ‘forget’ to send the corresponding invoice to the customer, or they send it late.

Problems like this not only to a working capital problem, but to a business failure if this not handled properly. Many times, companies focus so much on selling and delivering to customers that, that once done, the final step, which is issuing and recording an invoices, is sometimes forgotten or delayed. And of course, the later you send an invoice, the later a customer will pay.

This a pure administration issue and it doesn’t matter if the business is big or small, this is a crucial process. What is more, sending an invoice late doesn’t only cause cash flow problems, but it suggests a lack of control within a business. Customers may lose confidence in the business, leading to loss of sales, if weeks, months or even years later they are being charged by a service or delivery that happened some time ago.

How to solve this?

The solution depends on the business and its capacity, but in my opinion, if there’s a bottleneck, it should be done before looking for new customers or finishing works (what is the purpose of selling if you cannot get paid?). Sometimes, solutions must be put in place. Billing software can help with this, for example (has a delivery note been invoiced?). However, what is crucial here is to shorten the time between the moment a customer places an order and the moment it is paid and for that, a full revision of the process need to be carried out. Business consultants might help with this, but if there aren’t enough funds for this, feedback from employees or other business owners can be helpful.