Billing needs to be fast and accurate. Because the sooner invoices go out the door, the sooner you are likely to get paid. These eight suggestions could make your billing and cash flow better.
- Set a billing schedule
It’s tempting to give preference to paid work and put invoicing off. But no work is paid without invoicing, so make it a priority. Pick a day and time of the week to get it done, then lock it into your schedule. If you’re just too busy, hire a bookkeeper to help.
- Invoice more often, get paid more often
Invoicing can be such a chore that a lot of businesses only do it once a month. This can be counterproductive especially if your billing process is at the end of the month and the work is completed at the beginning of the month giving your customer a few weeks extra to make payment. It compounds the issue especially as most invoices are paid late. Consider billing weekly or more frequently if you do lots of odd jobs. It prevents a backlog from forming, and it gets your customers on the clock sooner. Money should start flowing into your business more consistently, rather than in dribs and drabs.
- Connect quotes and invoices
It’s a good idea to get quotes signed off before starting work. Use descriptions that are in agreement with your invoice so customers can see they’re getting what they paid for. It should help avoid misunderstandings or invoice disputes.
- Use invoice templates to their fullest potential
Many businesses use invoice templates from spreadsheet software. They can save a lot of time if you:
- save templates (with pre-filled information) for specific types of jobs and customers.
- build in formulae that total charges and add taxes for you.
Make sure you're getting the most out of your templates. As you grow, you may eventually move on to a dedicated invoice maker.
- What could an invoice maker do for you?
- Specialist software such as Xero can speed up the invoicing process by:
- learning the price of your products and services
- calculating taxes and automatically preparing paperwork for filing
- doing daily bank reconciliation to tell you which invoices have (and haven’t) been paid
- working from your smartphone, so you can send invoices from anywhere
- Track time and materials better
Figuring out the time or money you’ve spent on a job can be slow work. If you need to open a diary, refer to old emails, and sift through dozens of receipts to piece everything together, then it’s probably taking too long. You need one source of truth for time and one for expenses. Not everyone is good at staying this organized, but there are apps to help:
- Time-keeping apps allow you to clock in and out of jobs from your phone.
- Expense apps allow you to photograph a receipt and attach it to a specific job so the information is there when you go to make an invoice.
Also, be sure that these apps integrate with your invoicing system.
- Should you accept online payments?
You can get your money up to 50% sooner just by offering a convenient payment method. There are a lot out there, including debit and credit cards, automated clearing houses (ACH) like PayPal, or bank transfers. It costs nothing to set any of them up, although most providers charge a transaction fee. If your customers already pay on time, then you’re probably ok. But if they’re slow, an easy payment option could speed them up.
- Train your customers to pay on time
When you first bill a new customer, call them to check the invoice has everything they need. It’s a nice courtesy but you’re also taking away excuses for late payment. If they miss the due date, call the very next day. You don’t have to be aggressive. You’re just making sure nothing’s wrong, and signaling that you watch this sort of thing closely. Keep this up over the first few invoices to set expectations.
Build the perfect invoicing system
A smart invoicing system will help you get bills out faster, and money in sooner. That’s good for business. Use these eight questions to review your invoicing process regularly, and keep from falling behind. If you would like to know more about Xero or would like to take up our free implementation offer, submit your contact details here and one of our consultants will be in touch.
This article is an extract from the Xero website and is written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of its contents.