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.
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.
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 drips and drabs.
It’s a good idea to get quotes signed off before starting work. Use descriptions from 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.
Many businesses use invoice templates from spreadsheet software. They can save a lot of time if you:
Make sure you’re getting the most out of your templates. As you grow, you may eventually move onto a dedicated invoice maker.
Specialist software such as Xero can speed up the invoicing process by:
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 really need one source of truth for time and one for expenses.
Not everyone is good at staying this organised, but there are apps to help:
Also, be sure that these apps integrate with your invoicing system.
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 card, automated clearing houses (ACH) like PayPal, or bank transfer. 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.
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 signalling that you watch this sort of thing closely. Keep this up over the first few invoices to set expectations.
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.
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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.