Proper invoicing is crucial to ensuring that your business gets paid promptly and regularly. For this reason, it’s important to make sure that your invoicing process works as efficiently as possible.
Here are some of the best ways that can help you accomplish this:
1. Invest time in developing your invoice
As a business owner, it’s understandable that you’re constantly short on time. There are, after all, many other things that you need to establish, maintain, and monitor. However, it’s important that you take the time to actually sit down and set up an invoicing process that fits the needs of your business and the nature of your industry.
Keep in mind that there is more to invoicing that just asking clients for payment. You need to create an invoice that is clear, detailed, and specific. You also must make sure that it reflects the urgency of your request for payment, which means the payment due date should be displayed prominently. Moreover, you must set up a process for sending follow-up and reminders. This way, clients will be reminded when they need to pay.
2. Identify the right time to invoice
Timing is vital to successful invoicing. If you send out the invoice too early, you risk alienating your clients. However, if you send it out too late, your clients may end up paying you late as well. Worse case scenario is they may forget to pay you altogether. To identify the best time to invoice, you need to understand your company’s specific workflow. Most businesses that adhere to a straightforward workflow typically send out their invoices after they fulfil a sales order.
However, this system might not always work for you. For instance, there might be periods when you will be dealing with several orders at once, and each order would be at different stages of completion. In such cases, it’s important to determine the invoicing schedule depending on your specific business situation.
Here are out suggestions for ideal invoicing times:
- As soon as one project is completed.
- Once you and the client have agreed on the sale
- At regular pre-agreed intervals
- After you reach a milestone for a project – this is ideal for long-term jobs
3. Make sure your records are accurate
This might seem like no-brainer, but you would be surprised at how many business owners struggle with this. Having accurate and organised records will allow you to invoice faster. Plus, you can avoid mistakes and ensure timely payments.
Be sure to keep track of all the work you have done for your clients. List the time and materials you used on a specific project. Also, include any notes and special requests the client may have had so you can include that in the pricing.
Consider using timesheets as well as a time-tracking software to help you keep track of the number of hours or days spent on a client’s project. Take note of all the necessary details as you go. This way, you won’t have to worry about trying to remember them all at a later date.
4. Adapt the right mindset
As a business owner, you need to be proactive about requesting for payment from your customers. You can’t just sit around and wait for them to pay you. If you do, you might end up not getting paid at all. However, asking for payment can be an awkward and stressful task for new business owners. This is why they tend to feel cowed or intimidated by customers who refuse to pay.
To avoid feeling this way, remember that your clients agreed to your terms. You fulfilled your end of the deal, now it’s their turn. They received your products or services, so they have a legal and moral obligating to compensate you accordingly.
You have every right to request for payment. So, don’t be meek. Instead, be polite yet firm. Adapting this kind of mindset will help you ensure a more efficient and successful business invoicing process.
The invoicing process is an integral part of business accounting. As such, it is every business owner’s responsibility to make sure the system works efficiently all the time. By following the tips provided in this article, you will be able to set up invoices properly, motivate clients to pay on time, and reduce bad debt.
For more tips on how you can improve your company’s invoices, check out this blog post.
Liam White joined the Slater Byrne Recoveries team in early 2013. He has worked across the credit & dispute resolution industry for a number of years. He is currently working in a Marketing/Head of Sales capacity at Slater Byrne Recoveries.