Page 65 - Paulisms: Gold Nuggets for Small Business

often in B2B (business-to-business). Many don’t invoice until the job is finished, meaning there will be some months where work or stock isn’t invoiced.
You should always invoice a progress payment for the work that you have incurred, because you have stock sitting out there and you have labour that you’ve paid for. Make sure you invoice, so you can account for it and determine true profitability for the month.
Sometimes in our light commercial division, we would have a poor month and a great first week of the new month. That showed that the work that we had been incurring costs on and had paid for stock for over many months was being installed but was not invoiced out for until early the next month. Not only does that distort the Profit & Loss situation, but you also don’t get paid until the month after that (or 60 days, depending on terms), which is quite common in the construction industry.
We would often wait until the end of the month, and then there would just be a big surge in invoicing/turnover at the end of the month. Some of that business had been incurred earlier in the month, so why not invoice it as you complete or cannot carry out any more work for the month. In short, if you have a job running over a couple of months and by say the 10th of the month you can’t do any more work in that month, do a progress claim/invoice there and then. Why wait until the end of the month? Just get it into the system – get it out to the customer.
Then there’s the timing and speed of getting that invoicing out. We’ve had situations in the past where we would go chasing up companies for money they owed which was overdue on a progress payment, and they would say, ‘Well, your invoice didn’t come through until the first week of the month, so we’re not going to pay you until next month’ (another 30 days, making 60 Days). So that knocked the hell out of our cash flow. Be