10 Quick Tips to Improve Your Invoicing
There’s a lot of fun and exciting perks to starting your own business. Bookkeeping is not one of those. New business owners often underestimate the time and stress it takes to just get paid.
Here are some tips for how to make getting paid a little less painful:
1. Develop an accounts receivable process
Decide how you’re going to track your work, how soon you’ll invoice customers, how soon you expect to get paid, and after how many days you’ll follow up if an invoice is still unpaid. Figure out what invoicing app you’ll use or there are also a few super simple bookkeeping applications you might try.
2. Establish payment terms and stick with them
You don’t have to have the same payment terms for every client, but you need to establish whatever terms you have right at the beginning of your discussions with the client. If you say a 50% deposit is due before you’ll start any work, then don’t start working until you get that deposit. Don’t be afraid to be firm. Your client will respect you for it.
3. Don’t wait to send the invoice
Send the bill when the value of your work is still fresh in the mind of your customers. They need to feel the value of your work when they see the cost.
As work progresses, invoice in stages and detail that schedule to the client prior to billing.
4. Require a deposit
It’s a fairly standard business practice to ask for a deposit prior to starting any work. You may even want to have your customer’s credit card on file just in case.
5. Break a big invoice into “stage billing”
As work progresses, invoice in stages and detail that schedule to the client prior to billing. A big bill is easier to digest in small bite-size pieces. Your client might appreciate the option to make smaller payments over time rather than paying one lump sum.
6. Make a phone call
If your client is late on an invoice, just call them! A phone call is more personal and can soften the issue, whereas email can be taken the wrong way. Use this phone call as an opportunity to strengthen the relationship with your client.
7. Be clear in your communications
State your rates, due dates and any other expectations clearly and in no uncertain terms. Ask your client if they have any questions. Use “as quoted on” or “as per our email on” with dates in the event that your client “doesn’t remember” agreeing to something.
State your rates, due dates and any other expectations clearly and in no uncertain terms.
8. Include your payment terms on every invoice
Let your invoices be a constant reminder to your clients of what your payment terms are. Review these yourself every so often so you know what you need to follow up on.
9. Charge interest or late fees on overdue invoices
Don’t be afraid to penalize clients for not paying you on time. Interest and late fees motivate people to pay you when they’re supposed to.
10. Help them out
Offer to make payment arrangements if they are having difficulty paying. Oftentimes, the ego will kick in and they pay because they don’t want to look like they can’t afford to!
Invoicing and bookkeeping isn’t always fun and so it’s often the source of procrastination. Be warned that if you don’t already know it, cash is king, and cashflow is the lifeblood of your business. No money? No business…