💰 Finance & Accounts SOP
Invoicing, Payments, Tracking & Financial Health
What is This SOP For?
💰 Your Role in Finance
Finance handles the money side of the business. This includes:
- Invoicing clients — Creating and sending invoices for projects
- Tracking payments — Making sure we get paid on time
- Managing expenses — Tracking what the company spends
- Payroll — Ensuring team members get paid correctly
- Reporting — Understanding financial health
⚠️ Why This Matters
Poor financial management kills businesses. Even profitable companies fail because:
- They don't track who owes them money
- They spend more than they earn
- They don't have cash reserves for slow months
Your job is to prevent this.
The $3 Lakh Cash Flow Crisis
Why Payment Tracking Is Life or Death
We had a great quarter — $8 lakhs in projects. Team was celebrating. But when we checked the bank account... only $2 lakhs was there.
What happened?
- $2 lakh invoice sent but payment not followed up — client "forgot"
- $1.5 lakh project completed but invoice never sent (!)
- $50k paid to wrong vendor — typo in bank details
- Team salaries due in 3 days — not enough cash
We had to scramble — personal loans, rushed client calls, embarrassing vendor negotiations.
💵 PAYMENT POLICY (NON-NEGOTIABLE)
1. FULL PAYMENT UPFRONT (90% of Projects)
For projects under $1.5 lakhs, we require 100% payment BEFORE work begins. No exceptions. This protects us from scope creep, disappearing clients, and cash flow issues.
2. MILESTONES ONLY FOR LARGE PROJECTS
For projects $1.5L+, we accept milestones:
50% upfront → Start work
50% on preview link → Before final delivery
NO multi-milestone payments (25% idea, 25% mockup, etc.). Too complex, too many chances for payment delays.
3. NO WORK WITHOUT PAYMENT
If payment hasn't cleared, work doesn't start. Period. "I'll pay tomorrow" means we start tomorrow. No trust-based starts.
4. NO DISCOUNTS
Our prices reflect our value. Discounting trains clients to haggle. If budget is an issue, we suggest a smaller scope — not lower rates.
Invoicing Process
⚡ Invoice Within 24 Hours
The moment a client agrees to a project, send the invoice. Delays = forgotten payments. Strike while they're excited.
Invoice Checklist
| Element | Details | Example |
|---|---|---|
| Invoice Number | Unique, sequential | DH-2026-001, DH-2026-002... |
| Date | Issue date + Due date | Issued: Jan 3, 2026 | Due: Immediate |
| Client Details | Name, company, address, email | Accurate — affects legal validity |
| Service Description | What they're paying for | "Shopify Store Development - Premium Package" |
| Amount | Clear breakdown | Subtotal + GST (if applicable) = Total |
| Payment Details | Bank/UPI/PayPal | Include all payment options |
Invoice Status Tracking
| Status | Meaning | Action Required |
|---|---|---|
| 🟡 Sent | Invoice sent, awaiting payment | Follow up if no payment in 48 hours |
| 🟠 Overdue | Past due date | Immediate follow-up, escalate to manager |
| 🟢 Paid | Payment received and confirmed | Send receipt, update records, notify PM |
| 🔴 Disputed | Client has concerns | Resolve immediately, document everything |
Payment Tracking
🚨 Follow Up Religiously
Unsent reminders = unpaid invoices = cash flow problems. Never assume the client "will pay soon." Assume they forgot until proven otherwise.
Follow-Up Schedule
| Day | Action | Tone |
|---|---|---|
| Day 0 | Send invoice | Professional, clear |
| Day 2 | Friendly reminder if no payment | "Just checking if you received the invoice!" |
| Day 5 | Second reminder | "Wanted to follow up on invoice #XYZ" |
| Day 7+ | Escalate to manager | Direct call, firmer tone |
Hi [Client Name]! 👋
Hope you're doing great! Just wanted to follow up on invoice #[NUMBER] for [Amount].
If you've already sent the payment, please ignore this — sometimes bank transfers take a day or two to reflect on our end.
If not, here are the payment details again:
[Payment details]
Let me know if you have any questions! 🙏
Refunds & Disputes
⚠️ Refund Policy
Default stance: No refunds once work has begun. Our payment structure (upfront) means we commit resources immediately.
Exceptions (rare, requires manager approval):
- We failed to deliver what was promised
- Project cancelled before ANY work started
- Extraordinary circumstances (documented)
Dispute Resolution Process
| Step | Action | Owner |
|---|---|---|
| 1. Listen | Understand the client's concern fully | Finance + PM |
| 2. Document | Write down everything in detail | Finance |
| 3. Verify | Check our delivery vs. what was promised | PM + Dev |
| 4. Decide | Refund, partial refund, or reject | Manager |
| 5. Communicate | Clear, professional response to client | Finance |
Expense Management
Expense Categories
| Category | Examples | Approval Needed |
|---|---|---|
| Software/Tools | Shopify Partners, Figma, Slack, hosting | <$5000/month: Auto | >$5000: Manager |
| Freelancers | Contract developers, designers | Always needs approval |
| Marketing | Ads, content, promotions | Always needs approval |
| Team | Training, events, celebrations | Always needs approval |
✅ Expense Documentation Rule
Every expense MUST have:
- Receipt/invoice (screenshot or PDF)
- Date of expense
- Category
- Purpose (what it was for)
- Approval (if required)
Payroll Process
📅 Payroll Schedule
Salary Day: 1st of every month (or last working day if holiday)
Cutoff: All attendance, leaves, bonuses finalized by 28th
Payroll Checklist
| Step | By When | Owner |
|---|---|---|
| Collect attendance data | 25th of month | HR |
| Calculate leaves, deductions | 27th of month | Finance |
| Get approval on final amounts | 28th of month | Manager |
| Process payments | 1st of month | Finance |
| Send salary slips | 2nd of month | Finance |
Monthly Financial Reports
📊 What to Track Monthly
- Revenue: Total invoiced + Total collected
- Expenses: By category breakdown
- Profit: Revenue - Expenses
- Outstanding: Invoices sent but not paid
- Cash Position: What's in the bank right now
Monthly Report Template
| Metric | This Month | Last Month | Change |
|---|---|---|---|
| Revenue (Collected) | $___ | $___ | +/- __% |
| Total Expenses | $___ | $___ | +/- __% |
| Net Profit | $___ | $___ | +/- __% |
| Outstanding Invoices | $___ | $___ | — |
Finance KPIs
Financial Tools & Platforms
| Tool | Purpose | When to Use |
|---|---|---|
| PayPal | International payments | Client payments from overseas, freelancer payouts |
| Wise (TransferWise) | Low-fee international transfers | Better rates than PayPal for large amounts |
| Google Sheets | Financial tracking | Invoice tracker, expense log, payroll sheets |
| Razorpay / Stripe | Card payments | Collecting payments from clients who prefer cards |
| Bank NEFT/IMPS | Domestic transfers | Salaries, vendor payments in India |
| Invoice Templates | Professional invoicing | All client invoices (use standard Digital Heroes template) |
📋 Daily Finance Workflow
Check bank accounts for incoming payments → Update invoice tracker → Follow up on overdue
Process any approved expenses → Log all transactions → Respond to payment queries
Reconcile day's transactions → Update cash position → Flag any issues to manager
🚨 Financial Red Flags to Escalate Immediately
- Any suspicious transaction or unknown sender
- Payment received but less than invoiced amount
- Client disputing payment after work delivered
- Freelancer / vendor requesting payment to different account
- Any request to bypass normal approval process
Troubleshooting Common Issues
Late Payment Issues
| Situation | Cause | Solution |
|---|---|---|
| Client says "I paid" | May have paid wrong account, different name, delayed bank transfer | Ask for payment confirmation/screenshot, check all accounts |
| Client is avoiding | Cash flow issues, forgot, unhappy with work | Call directly, understand real issue, escalate if needed |
| Payment stuck in processing | International transfer, bank delays | Wait 3-5 business days, check SWIFT for international |
| Partial payment received | Client misunderstood, or paying in installments | Clarify immediately, don't start work until full amount |
Invoice Disputes
⚠️ When Client Questions Invoice
- "This wasn't in scope" → Refer to original agreement, show what was promised
- "I thought it was cheaper" → Send original quote, show any approved change orders
- "I want a discount" → "Our prices reflect our value. We don't discount work already completed."
- "I won't pay until X is fixed" → "Let's address the issue together. Payment secures your support priority."
Bank & Payment Errors
🚨 If You Sent Payment to Wrong Account
- IMMEDIATELY contact your bank (within hours, not days)
- Request reversal or trace
- Document everything with timestamps
- Contact recipient bank if possible
- Report to manager same day
Prevention: Always double-check account numbers. For first-time vendors, send a small test amount first.
Tax & Compliance Reminders
📋 Important Dates to Track
- GST filing deadlines (if applicable)
- TDS payment deadlines
- Annual tax return dates
- PF/ESI due dates for employees (if applicable)
Set calendar reminders 1 week before each deadline.
ChatGPT Prompts for Finance
💡 Use AI to Streamline Finance Tasks
Use these prompts to draft professional messages, calculate scenarios, and handle tricky finance situations.
Invoice & Payment Communications
I need to send a payment reminder to a client:
Amount owed: $[X]
Days overdue: [X] days
Previous reminders sent: [None / 1 / 2+]
Client relationship: [New / Long-term / VIP]
Write a reminder that:
1. Is professional but increasingly firm based on overdue days
2. States the amount and invoice number clearly
3. Includes consequences if applicable
4. Offers a way to discuss if there's an issue
5. Maintains the relationship
A client is disputing an invoice:
Their complaint: "[What they're saying]"
Original agreement: [What was agreed]
Work delivered: [What we actually delivered]
Amount in dispute: $[X]
Help me respond:
1. Acknowledge their concern professionally
2. Reference the original agreement/contract
3. Explain why the charge is valid
4. Offer a reasonable compromise if appropriate
5. Keep the door open for future business
Financial Analysis
I need to prepare a monthly financial summary:
Revenue this month: $[X]
Expenses breakdown: [List major categories]
Compared to last month: [Up/Down by X%]
Notable items: [Large expenses, new clients, etc.]
Create a summary that:
1. Opens with key metrics at a glance
2. Highlights positive trends
3. Flags concerns or unusual items
4. Compares to previous period
5. Includes actionable recommendations
Help me analyze project profitability:
Project revenue: $[X]
Team hours spent: [X] hours
Hourly rate target: $[X]/hour
Direct costs (apps, tools): $[X]
Calculate:
1. Gross profit and margin
2. Effective hourly rate achieved
3. Was this project profitable? By how much?
4. What price should we have charged for target margin?
5. Lessons for future pricing
✅ Pro Tips for Finance ChatGPT Use
- Never share client bank details — Keep sensitive data out of prompts
- Double-check calculations — AI can make math errors
- Template builder — Create reusable email templates
- Scenario planning — Run "what if" financial scenarios
- Report formatting — Get help structuring financial reports
Cash Flow Management
💡 Cash Flow = Survival
A profitable business can still fail if cash flow is poor. Monitor weekly, not monthly.
Weekly Cash Flow Check
| Category | What to Check | Action If Yellow/Red |
|---|---|---|
| Incoming (Next 2 Weeks) | Expected payments from clients | Follow up on any overdue. Send reminders 2 days before due. |
| Outgoing (Next 2 Weeks) | Contractor payments, subscriptions, payroll | Prioritize by urgency. Delay non-essential if needed. |
| Buffer | Is there 2+ weeks runway in account? | If less than 1 week, escalate to founder. |
| High-Risk Invoices | Any invoices over 7 days past due? | Escalate to PM and founder for collection action. |
Cash Flow Forecasting Template
| Line Item | Week 1 | Week 2 | Week 3 | Week 4 |
|---|---|---|---|---|
| Opening Balance | $___ | $___ | $___ | $___ |
| + Expected Payments | $___ | $___ | $___ | $___ |
| - Payroll | $___ | $___ | $___ | $___ |
| - Contractor Payments | $___ | $___ | $___ | $___ |
| - Tools & Subscriptions | $___ | $___ | $___ | $___ |
| - Other Expenses | $___ | $___ | $___ | $___ |
| Closing Balance | $___ | $___ | $___ | $___ |
Monthly Reconciliation Checklist
📋 Complete by 5th of Each Month
Reconciliation ensures our records match reality. Never skip this.
| Task | How to Do It | Common Issues |
|---|---|---|
| Bank Statement vs Records | Match every transaction in bank to our invoice/expense tracker | Missing receipts, unrecorded payments |
| Invoice Status Update | Mark all paid invoices, identify overdue ones | Payments without invoice reference |
| Expense Categorization | Ensure all expenses have proper categories | Miscellaneous becoming too large |
| Contractor Payment Check | Verify all contractors were paid correctly | Wrong amounts, missed payments |
| Subscription Audit | Review all active subscriptions | Paying for unused tools |
🚨 Escalate Immediately If:
- Bank balance doesn't match records by more than $100
- Found unauthorized transactions
- Missing documentation for transactions over $500
- Duplicate payments detected
Handling Difficult Situations
🔴 Client Disputes Invoice
🎯 Task Priority Order (What Comes First)
Handle in this order every day:
- 🔴 P0 - Payroll Processing → Team salaries are NEVER late. Non-negotiable.
- 🔴 P0 - Payment Disputes/Fraud Alerts → Financial emergencies need immediate action.
- 🔴 P0 - Critical Vendor Payments → Subscriptions, hosting, essential services.
- 🟡 P1 - Invoice Processing → Send invoices within 24 hours of project completion.
- 🟡 P1 - Payment Follow-ups → Chase overdue invoices per the schedule.
- 🟢 P2 - Bank Reconciliation → Weekly reconciliation, daily if high volume.
- 🟢 P2 - Expense Tracking → Log and categorize all expenses.
- ⚪ P3 - Reporting & Forecasting → Monthly reports, cash flow projections.
Golden Rule: Payroll > Emergencies > Cash in (invoices) > Cash out (payments) > Reporting.
🔴 Client Disputes Invoice
Situation: Client says amount is wrong or refuses to pay.
Response: "Let me pull up the project scope and payment agreements. I'll send you a breakdown. If there's a discrepancy, we'll resolve it together."
Rule: Always have documentation. Never argue — show the paperwork.
🔴 Payment is Overdue
Situation: Client exceeded payment terms and hasn't paid.
Response: Escalate reminders: Day 3: Friendly reminder. Day 7: Formal notice. Day 14: Warning of paused services. Day 30: Escalate to management for collection.
Rule: Follow the sequence. Document every outreach attempt.
🔴 Expense Without Approval
Situation: Team member made purchase without following approval process.
Response: Document the expense, inform their manager. Remind them of the process: "All expenses over [X] require pre-approval. Please follow this going forward."
Rule: Process exists for a reason. Enforce it consistently.
🔴 Client Requests Refund After Work Delivered
Situation: Work is complete, client wants money back.
Response: "I understand you're not satisfied. Our terms state that completed work is non-refundable. Let me connect you with our CS team to discuss how we can address your concerns."
Rule: Refunds go through management. Finance doesn't make refund decisions alone.
🔴 Discrepancy in Bank Reconciliation
Situation: Records don't match bank statement.
Response: Don't panic. Check: pending transactions, duplicate entries, timing differences. If still unclear, flag to management immediately — do not "fix" unexplained discrepancies.
Rule: Investigate thoroughly. Never hide or "adjust" unexplained amounts.
🔴 Cash Flow Emergency
Situation: Not enough funds to cover upcoming expenses.
Response: Alert management immediately with: Current balance, upcoming obligations, expected incoming payments, and recommended actions (delay payments, accelerate collections).
Rule: Early warning is critical. Never wait until payday to discover problems.
🔴 Someone Requests Payment Details via Email
Situation: Email asks for bank details or to change payment info.
Response: NEVER respond to payment changes via email. Always verify by phone using known numbers. Treat all such requests as potential fraud until verified.
Rule: Verify verbally. Email requests to change payment = red flag.
🔴 Salary Payment Error
Situation: Paid wrong amount to employee.
Response: Acknowledge immediately. If underpaid: Process correction same day. If overpaid: Inform employee and arrange recovery plan. Document everything.
Rule: Fast correction + transparent communication = maintained trust.
Your Daily Inspiration
"The numbers tell the story. Your job is to make sure it's a success story."
— Digital Heroes Philosophy
📖 Success Story: The Invoice That Saved the Client
Our finance team noticed something odd — a client's payment was late for the first time in 18
months. Instead of just sending a reminder, they called to check in.
Turns out, the client's email had changed and invoices weren't reaching them. A simple update —
and a genuine conversation — kept the relationship strong.
The result? The client upgraded to a $3,000/month retainer because "you actually care about us."
The lesson: Finance isn't just numbers — it's relationships. Every invoice is a
touchpoint.
⚡ Productivity Hacks for Finance
- 📅 Weekly Money Hour: Block 1 hour every Monday for reconciliation and cash flow review
- 🔔 Automated Reminders: Set up auto-reminders for payment due dates
- 📊 Dashboard First: Check the financial dashboard before email every morning
- 📝 Template Invoices: Pre-built templates = 0 errors, faster processing
- 🎯 Same-Day Processing: Process payments received within 24 hours — never let them pile up
"Cash flow is the lifeblood of the business. Guard it."
"Accuracy isn't optional. It's everything."
"On-time payments = On-time paychecks for the team."
🌅 Start Each Day With This:
"Today, I protect the financial health of our company. My accuracy enables everyone else to do their best work."