7 Ways to Handle Invoicing More Efficiently in Your Small Business
Small firms face unique struggles in operating their business, particularly with regard to finances, especially when you’re laboring to attract more clients. The invoicing process is a critical piece of keeping your revenues organized and guaranteeing a steady cash flow.
If you find yourself at a loss in this process, you need some tips to get organized.
1. Automate the Billing Process
Manual billing almost always generates errors that automation would correct. Although there’s still a chance of human error, the risk is considerably smaller with an automated billing system. Most companies switch to integrated invoice and accounting software at some point; the sooner you do so, the faster you’ll get your billing process under control.
A popular choice, especially among small firms, is the invoice app Billdu. It’s easy to use, and its 50,000 users report time savings of 60 percent, while invoices get paid twice as fast.
No matter which tool you use, look for simplified invoicing, expense records, mobile access, quick payments, payment reminders, dashboard overviews, and inventory trackers. The time savings will be astonishing, and you’ll have a more organized payment system in the process.
2. Use a Simple Payment Process
Getting paid for the work you do will inevitably be difficult if you make it so. Some platforms charge a fee on both ends, only take certain payment types, or make the invoicing process more complicated than necessary.
Choosing a simple invoicing tool can be a huge help for your clients. Also, you can do more on your end. Use clear language, switch to electronic invoicing, maintain clear records, and allow for direct deposit. You’re less likely to run into problems if you make it easy on your clients.
3. Organize Your Invoicing System
Successful management of invoices comes from constant diligence, but when you’re the harried owner of a small business, who has the time to monitor the invoicing system? Here are some organizational metrics that can support any invoicing system:
? Create a checklist to follow with each invoice to minimize errors. It might include account name, contact information, tax ID numbers, proper wording, and anything else that’s important to your invoice process.
? Set up automatic reminders within your invoicing software.
? Understand the billing cycle, including when to send recurring, interim, or final invoices.
? Designate certain days during the week or month when you’ll work on invoices. You’ll get things done and give your clients a schedule they’ll know and respect.
? Number your invoices so you can easily track down payments or answer questions from clients.
? Set your payment terms in advance and make sure every client understands them fully before offering your services.
4. Anticipate Delays
Even with automation, invoicing delays will happen. Anticipating them will help you minimize the disruption. Nothing can be done about some delays, but others can be anticipated and even avoided if you’re prepared.
Start by getting organized with clear payment terms and checks and balances. Make sure you’re sending the right amount to the right person. Ask where you should send the invoice at the beginning, and make sure the client understands the expected terms.
You should also send the invoice at a convenient time. If you send it at 10 a.m. on Sunday morning, you’re not likely to get a quick response, and there’s a greater chance the client may forget about it.
But if you send an invoice on a Thursday afternoon, the client is likely to take care of it on Friday when the company handles payroll. Note down any other delays you experience with your current invoicing system and make a plan to avoid future problems.
5. Go Paperless
If you’re a little old school or work mostly with local clientele, it’s tempting to use paper invoicing for everything. But paper billing is now inefficient, difficult to organize and secure, and often inaccurate.
Electronic invoicing eliminates the need for printing, mailing, and storing your records. If you’re concerned about the security of your invoices, print a second copy and keep it in your records. Whenever there’s a question about the electronic version, you can easily refer to your copy.
6. Maintain Constant Communication
Solid communication is a staple of excellent customer service, and it’ll be vital to your billing process. When you know what’s going through customers’ minds, you’re better able to deliver good service and provide what they need without offending or taking advantage.
It’s also wise to communicate during and after a project. Send status updates so the customer can be prepared when the payment is called in. Send a reminder the day of or day before the client’s payment is due, as well as late reminders afterward.
You can also include a personalized note to say “thank you” after a payment has been made. Such communication is simple on your part, but it can foster a solid return on investment.
7. Enact Penalties
You can’t run a business on late payments. About 82 percent of the businesses that fail do so because of cash flow problems.
Penalties for late payment can help you avoid late and inadequate payments. Charge a small, flat fee for late payments as well as interest on overdue balances. The goal here is not to antagonize your clientele but to behave professionally and gather the funds necessary to continue your business.
Billing problems can be stressful for any small firm, but if you put the right parameters in place, you can get the job done right.