Search
Close this search box.
Blog » Business Tips » Best Practices for Billing

Best Practices for Billing

Regardless what you do for a living, billing is a necessity. Without that cash flow it’s going to be challenging to pay your bills on-time and keep your business in operation. That’s why it’s important that you have a billing process in place that not only simplifies billing, but also strengthen the relationship between you and your clients.

That may sound difficult, but it can achieved if your follow these best practices for billing.

Agree on Payment Terms

Before starting on any work for a client, both you and the client should agree on payment terms. This covers everything from how much you charge for your services to the scope of the project to when payment is expected. This doesn’t necessarily mean that this has to be a contract. It could simply be a written agreement that both parties sign. Having this agreement in place prevents any misunderstandings regarding the bill.

Bonus Tip: Make sure that you have comparable rates based on your experience and skill level and have determined if you’re charging hourly or by-the-project. For example, if you’re fresh out of law school and it takes you a long time to research information, the client could dispute the bill since you spent too much time researching.

Only Use Accurate and Real-Time Data

Having accurate and up-to-date data is imperative when billing a client. After all, you don’t want to under-or overcharge a client for your services. That’s not fair to either party.

By using time tracking software, for example, you’ll have access to this type of information since it tracks the billable hours for individuals or by-project. You can then import this data into your invoice so that you can quickly send out accurate invoices.

This not only improves cash flow, it avoids any questions or concerns that a client may have about the bill.

Upgrade to Billing Software

Speaking of software, if you’re still manually filling out invoices or using programs like Excel, you’re not doing yourself any favors. There are hundreds of invoicing tools that help you send out your bills electronically. Instead of mailing your invoices, you’ll be able to send and receive payments in a matter of minutes electronically. Again, this greatly increases your cash.

If that wasn’t enough, invoicing tools, such as our own awesome tool, come equipped with features like the ability to track payments, invoice multiple clients, customize payment terms, set-up recurring payments, and send late payment reminders.

Send Invoices Quickly

The sooner you send out your invoice, the quicker you’ll get paid. With that in mind, don’t want until you have some free on a Saturday afternoon to bill a client. The invoice should go out immediately following the completion of a project.

The only exception is if you and the client have a recurred on a recurring billing date, such as the first and fifteenth of each month.

Personalize Your Invoices

You can make your invoice stand out from the crowd by personalizing it. This includes adding your logo and color pattern to the bill. Besides making your invoice unique, it can also reassure the client that they’re sending the invoice to the right individual.

Offer Multiple Payment Options

What happens if you only accept payments through PayPal but your client doesn’t have a PayPal account? You probably aren’t going to be getting that payment anytime soon. That’s why it’s important that you accept multiple payment options like eChecks, credit cards, and payments through third party gateways like PayPal. It’s convenient and speeds up the billing process.

Know Where You’re Sending the Bill

Double-check that you’re sending the bill to the right address – regardless if it’s a physical address or an email address. Sending the bill to the wrong location delays the payment process.

Also make sure that you’re sending the invoice to right individual. Just because you were hired by a client doesn’t mean that they’ll be the individual paying you. They have an in-house accountant or outsourced billing elsewhere. Again, this prevents you from getting paid quickly.

Itemize All Invoices

Your client wants to know exactly what they’re paying you for. If you have a vague and broad invoice, the client may be inclined to question the charges. Stay ahead of the client by providing detailed descriptions of the services or products that are included in the bill. In other words, it’s a breakdown of all the costs associated with a project.

For example, if you were a painter, you wouldn’t send an invoice that just had one item like ‘Painted house.’ You would breakdown the project by how long it took you to complete each room, as well as the cost of the materials.

Make Invoices Easy to Track

Using invoicing software makes tracking invoices easy, as each invoice includes a unique number after it’s been created and sent. This allows you to easily locate the invoice if it hasn’t been paid or if you get audited.

In most cases, invoices begin at 001. While that’s not a concern if you have one client, you may have to develop a tracking system if you have multiple clients. For example, if you have client named Bill’s Seafood, then the invoice number could be ‘Bill’s 001.’ it’s just a simple tactic to help you differentiate between invoices.

Provide Incentives

Offering an incentive, like a 2% deduction off the bill if paid within ten day, is an effective way to motivate clients to pay you quicker.

Follow-Up With Clients

Even if you you’re using software that reminds clients that they’ve missed a payment, it’s still your obligation for you to contact them if you want to be compensated. Whether if it’s a phone call or email, you have to follow-up with the client if payment hasn’t been received.

If you’re direct with them, the client should pay you immediately. However, there are times when an invoice simply gets overlooked; it’s also possible that the client can’t pay the invoice because of financial hardships. In that case, you can either get to the bottom of the issue or workout a payment plan with the client.

Have a Non-Payment Plan in Place

Unfortunately, there will be times when a client doesn’t pay your bill – even after you’ve follows-up with them. What do you do when that happens? Instead of trying to figure that out when that happens, have a plan in place so that you can resolve the issue as soon as possible.

This plan could include sending them a new invoice with late charges, mailing them a certified letter from your lawyer, taking them to small claims court, handing over the bill to a collection agency, or just writing the debt as a tax deduction. Before taking any actions, stop work immediately for the client and crunch the numbers to determine whether or not the bill is worth pursing.

About Due’s Editorial Process

We uphold a strict editorial policy that focuses on factual accuracy, relevance, and impartiality. Our content, created by leading finance and industry experts, is reviewed by a team of seasoned editors to ensure compliance with the highest standards in reporting and publishing.

TAGS
Freelance Writer at Due
Albert Costill graduated from Rowan University with a History degree. He has been a senior finance writer for Due since 2015. His financial advice has been featured in Money Magazine, Fool, The Street, Forbes, CNBC and MarketWatch. He loves to give personal finance advice to millennials.

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Categories

Top Trending Posts

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More