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ACCOUNTING

Why Quick Billing Makes Sense

Advice on invoicing customers on the same day you ship goods to strengthen cash flow and grow your business.
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Here's a reality bite: the slower you bill, the weaker your cash flow, and, by extension, the more anemic your long-term growth prospects are, too.

Steven Mayer, an audit partner at New York City accounting firm Goldstein Golub Kessler & Co., advises daily billing. "Instead of billing once every two weeks or monthly, you could invoice the same day you ship goods or conclude a service contract. You'll be able to quantify the actual financial benefits," he explains. "Just figure out how much interest you can earn on cash in hand during that two-week or monthlong period, compared with how much it would cost you to finance the same sum out of your credit line."

If, given a meager financial staff, daily billing is too difficult for you even to consider, Mayer strongly encourages weekly billing. "Not only does that start your collection cycle off sooner, but because your goods or services are fresh in your customer's mind, it also increases your chance of being paid promptly."

One final tip: if your company's structure can't yet support weekly billing, Mayer proposes you start by accelerating monthly billing dates as frequently as possible. "Let's say you send out 500 invoices, always on the 25th or 26th of the month. If you reschedule that billing to the 15th this month and then push it up to the 5th next month, you'll give cash flow a great boost."

Last updated: Mar 1, 1995




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