Invoice factoring for small business is what we specialize in here at Thales Financial. Many years of working in this industry have given us tremendous insight into how small businesses handle billing and payments. One of the most important things we have learned over the years is that managing invoices is different than merely collecting them.
The invoice collection mindset is pretty simple. Invoices are prepared and sent immediately after services are rendered. The company then waits until the due date before sending a follow-up invoice. If payment still isn’t made, a phone call is made or an email sent.
Invoice management is different. Rather than viewing the invoice as simply an instrument for payment, a company considers it an integral part of the customer relationship. An invoice is one small part of a much larger whole.
Invoices and Customer Relationship Management
Managing invoices rather than collecting them can be a hard principle to grasp. A good way to get one’s proverbial feet wet is to think of it like customer relationship management (CRM). A company that practices sound CRM strategies is a lot like a doctor who practices holistic medicine. The company’s entire relationship with a customer is just as important as the individual pieces of that relationship.
A key tenet of CRM is communication. Companies make a point of maintaining regular communications so that they and their customers stay on the same page. Communicating about everything from new products and services to billing and payments is just a normal practice.
When it comes to managing invoices, regular communication is a no-brainer. Regular invoices are followed by casual reminders that bills are coming due. When payments are late, another casual reminder is often all it takes to remedy the situation.
Managing Customer Expectations
Customer expectations have a lot to do with getting invoices paid on time. Managing those expectations is no different than managing what your customers can expect from you. What a customer expects paves the way for your relationship over the short and long terms.
From an invoice management perspective, managing customer expectations is mostly about letting them know when payment is due and how you will handle overdue invoices. The key here is consistency. When customers always know what to expect, they are less likely to forget or neglect outstanding invoices.
Mutual Respect and Trust
Managing invoices as part of a larger CRM strategy will only be as successful as the whole relationship you build with your customers. The best relationships are built on mutual respect and trust. Take care of your customers and they will take care of you. That is the golden rule of business.
Every business runs into those rough patches when paying bills is a struggle. But you know from your own experience that loyalty goes a long way. When you are struggling with cash flow, you give priority to those businesses to which you are most loyal. You do your best to take care of those companies that have earned your respect and trust.
Managing Is a Better Way
Invoice factoring is a business built on collecting payments from customers. A company sells us unpaid invoices in return for a fee based on the value of those invoices. We then take on the responsibility of settling up.
We have learned the value of managing invoices rather than just collecting them. If we could offer one piece of advice to every small business we work with, it would be to manage their invoices. Managing is a better way. It helps foster solid relationships and strong partnerships that stand the test of time.