Mary Ann Reilly

This report originally appeared in the May 2010 issue of DOTmed Business News

For many medical supplies and equipment professionals in a down economy, an efficient invoicing process is essential to maintaining a healthy cash flow. Smart invoicing can significantly shorten the time between completing work and getting paid for it. It can also reduce the time spent sending invoices and handling payments.

Results from the Spring 2010 American Express OPEN Small Business Monitor reveal that 60 percent of the entrepreneurs surveyed are experiencing cash flow issues, with their biggest cash flow worry being the ability to pay bills on time. In an economic downturn, customers can take longer to pay and this can mean less available cash for medical supplies and equipment professionals to pay their own bills.

No matter what their current invoice process is, medical supplies and equipment small-business owners can take steps to help improve both how quickly they are paid and customer relations. These tips can serve as a roadmap to improve your invoicing:

Check References: Before establishing relationships with new customers, research their credit and payment histories so you can avoid companies with payment issues. Have them complete a credit application and check their references. Conduct a credit check with a credit reporting agency, such as Dun & Bradstreet or Experian, before accepting a large order. Consider requiring a deposit from those whose credit reports raise concern.

Adapt to Your Customers' Preferences: Contact new customers to inquire about the information they require on invoices. Time spent on this process can go a long way toward ensuring that your invoices move quickly through a customer's payment system. Here are some things you'll probably want to ask your customers concerning what they need on an invoice:

Do they need a purchase order number or will your company invoice number suffice?

Is an itemized breakdown of work completed required on an invoice or just a general description?

Should you provide a description of the goods or services delivered?

Do you need to include your employer identification number on the invoice?

Also determine how your customers like to receive invoices. Some may prefer faxed invoices; some require mailed copies; and others will only accept invoices delivered via e-mail. Consider setting up a receipt process so you will know your invoice was actually received.

Invoice Immediately: Send invoices the day a project is completed or as soon as an item is shipped. By waiting even a few days, you may miss a customer's payment cycle and significantly extend the time it takes to receive funds. Automated invoicing and receivables solutions help with both creating those efficiencies and managing customer relationships. This will not only become critical as more and more businesses move toward electronic payments, it could also be a selling point to potential customers who may appreciate having that option. It also benefits your bottom line by limiting your exposure to late payments.

Set Clear Terms: Instead of stamping "Due on receipt," include a specific due date. Companies that pay in 30 or 45 days will follow their own schedules, but it gives you the chance to put your terms in writing. If you offer trade terms, such as discounts for early payment, use the actual dates involved instead of simply including your generic terms.

Build a Document Trail: Document all communications and telephone conversations about invoices so they are on file for future reference. Keep track of requested changes in writing. This trail will help when going after late payments. Develop a payment tracking system so overdue payments are brought to your attention. Consider using software that tracks payments or ask your bookkeeper, CPA, banker or financial adviser for suggestions on ways to do this yourself. As soon as you send an invoice, put the details into your tracking system. Also record the date you receive payment.

Make Collection Calls: Promptly follow up on late payments with a telephone call. Reaching out can often clear up misunderstandings. Adopt a matter-of-fact manner for these calls and assume good intentions on the part of your customers. Before the conversation ends, determine a specific amount due and date of receipt. Have someone other than you or your customer-facing staff make collections calls if you are concerned about damaging customer relations.

Mary Ann Reilly is with American Express OPEN working with AcceptPay, a service available from the company. AcceptPay is an online invoicing and payment solution that helps business owners get paid faster and improve cash flow at a time when customers are taking a longer time to pay. AcceptPay allows business owners to create, send and track invoices - all in one place. Customers then have the option to pay the invoice through a variety of methods, including major credit and debit cards, eChecks, cash, or checks. Resulting payments are deposited directly into the business owner's bank account. Mary Ann Reilly is the senior vice president for American Express OPEN.