MISTAKE #1: FAILING TO LINK YOUR BANK WITH XERO



Why?


You risk missing when a customer pays, or worse, not noticing if they don't, and running into financial problems if you rely on outdated data rather than real-time, up-to-date information.



What you should do is:



Imagine logging into an app every day which has pulled in the financial transactions from your online banking system. This means you'll be able to link payments in and out of your bank to client invoices as well as any payments due to suppliers, such as hosting expenses, contractors, and so on. Xero Touch is an iOS and Android app that gives you a real-time hand-held update on your business finances, so you can be anywhere in the world and never be caught off guard.



MISTAKE NO. 2: FAILURE TO BILL YOUR CUSTOMERS ON TIME




Why?



Nothing is more frustrating than finishing a project, being distracted by the next one, and forgetting to bill for the previous one. This can result in cash flow concerns if it spreads to more and more jobs, but we often find that people are simply too preoccupied with their work to take action.



What you should do is:



1) For one-time tasks, establish a quote on Xero upon agreeing on the initial pricing for the job, which you can subsequently turn into an invoice at the touch of a button once the work is completed; and



2) Create a repeating invoice in Xero for retainer jobs or recurring subscription money, which means the invoice will be issued every month unless you instruct it to stop. Our invoices, for example, are sent out on the first of each month while we are sleeping!



MISTAKE 3: FAILING TO SEND YOUR INVOICES TO THE APPROPRIATE PERSON



Why?



If your customers are small firms, this won't be a problem because the person you agree to do the work for will most likely also be responsible for paying the bills. Consider the following scenario: you're dealing with much larger companies, with various locations, departments, and bureaucracy-ridden processes. If you don't send the invoice to the correct person and department, you won't get paid when you need it.



What you should do is:



When the fee has been agreed upon, find out how the invoice will be paid, including whether the invoice requires a reference for their system (e.g., a purchase order) and who the invoice should be emailed to (never post an invoice if it can be emailed!). Then, when sending the invoice from Xero, email it to your contact and the payments department, attaching all of the backups.



MISTAKE 4: NOT MAKING PAYING THE INVOICE EASY Why?



Your customers are just like you: they're busy. What would you do if you received an invoice that didn't include your bank account information? You'd unknowingly delay by saying, "I must check up on that," but never doing so as a million other items came in.



What you should do is:



You may now include a "pay now" link to your invoice in Xero. When the email is opened (see Mistake 3 - never send an email other than by email), the receiver will see a backup of the invoice as well as a very useful button that allows them to pay in a matter of seconds. Imagine getting paid within an hour or two of sending your invoice! To provide as much flexibility as possible, we recommend setting up a PayPal or Stripe account for credit card payments and a GoCardless account for bank transfers.