Cashflow best practice
In the Invoicing Best Practice edition, we discussed how important automating invoicing is for a business to reduce administrative errors, etc. In this edition, we look at how we can split invoicing and accept credit card payments to move closer to cashflow best practice!
An invoice split is one of multiple invoices that together formed one original invoice. Splitting that single invoice into multiple invoices lets you offer flexible payment schedules. We find many flexible workspace providers want to invoice their customers for 2 different types of services:
• Contractual (Repeat) billed in advance using repeat invoicing described above; and
• Services (Adhoc) billed in arrears where you’re importing transactions from external systems such as Meeting Hub described below;
We consistently see Centres that adopt this split invoicing strategy benefit from reduced bad debt, fewer errors and less rekeying when billing.
Why split an invoice?
(a) Customers having financial difficulties will hold off paying your $2,500 office rental charge, so they can dispute a $25 photocopying charge;
(b) By offsetting different charges you’ll benefit from regular cashflow and payments instead spiking on the 1st or 30th of the month;
(c) When you do have issues with bad debt it will be spread across the month. This allows your team to focus on recovery action, working with your customers to secure payment throughout the month instead of all at once;
Payment via credit card
Another key aspect of cashflow best practice is taking payments via credit card for your services. There are many ways to take payments via credit card today. In the past, businesses had to apply to their bank for a merchant facility. This would take a month or two to be completed. At that time, you could only process payments in a single currency. You needed your own internal development team to integrate the banks API with your back-end systems.
Today, many off the shelf solutions integrate with e-Commerce facilities directly with your website e.g. Woocommerce, Shopify, and many more. Here at Meeting Hub, we prefer to use Stripe for all payment processing. The Stripe API provides strong support for all the functionality our customers need when managing payments associated with their bookings. We even use Stripe internally, integrated with Xero to automate license fee payments for our software from customers.
Customers tell us that they don’t like to take payments via credit card due to the fees involved. We can’t understand why, when you consider the benefits in terms of improved cash flow and the ability to enforce cancellation terms.
There are accounting packages that also provide the ability for AutoPay by Credit Card. So, once you’ve sent out an invoice for a recurring service, your customer can opt-in to set up an automated repeat payment for the same amount each month. This will reduce your arrears even further.
In our experience the barrier to taking payment via credit card is normally an underlying issue with internal systems, or processes in terms of how they reconcile payments. If you’ve automated your invoicing using repeat invoices, integrated a payment service like Stripe and connected bank feeds into your accounting package it couldn’t be easier.
Cashflow best practice isn’t a piece of software you can buy, install, and configure. It’s a mindset, and part of that mindset includes being open to doing things differently.
Want to improve your cashflow by taking payment at time of booking for your meeting rooms? Request a Demo of Meeting Hub today!