Adopting Smart Invoicing Habits as a Business Owner
Habits often have a negative association. But good habits, such as exercise and being grateful, are important since they can eliminate wasted time. Other benefits are helping to achieve goals, and essentially build the foundation of our lives. The same is true when it comes to smart invoicing habits.
Need a place to start? Begin by adopting the following invoicing habits.
Keep a record of your client’s contact information.
You need your client’s or customer’s contact information. Particularly you need their email, phone number, physical address, or even a fax. Without these you can’t send them an invoice.
When don’t send out bills, you don’t get paid. Make sure that you have their contact information on file. Even though cloud invoicing software will store this data for you, I would have a backup file on another cloud storage platform to be safe. –
Your iPhone and Android should also store your contacts on their cloud platforms.
If you’ve already gotten ahead of the game and have done this, then make sure that you periodically reach out. You’ll need to make sure that clients contact information hasn’t changed. If so, make sure that you update the information you have immediately.
Make smart invoicing habits a priority.
Remember, every day that an account is unpaid the more money you’re losing from working capital, such as wages, rent, supplies, etc.
Invoicing promptly means you’re ahead of your expenses so that you won’t get hit with late fees and can budget accordingly.
Even though you’re busy, make invoicing a priority by invoicing either immediately after completing a project or setting aside a dedicated time to bill, like every Friday or the last day of the month.
However, it’s probably not a bad idea to sync with your client’s paycycle so that you’re not waiting for them to pay your invoice.
If your busy issues credit make sure that you assess each customer before issuing credit terms. They have a history of not paying their bills on-time be more careful with the lending. If they applied for hefty line of credit, you could put your business in jeopardy since you’ll be stuck with the bill.
Add a business credit check report to your new customer checklist. Review their credit transaction history and credit reports, and seek referrals.
For high risk customers, you may want to shorten credit terms or negotiate progress payments so that you can reduce the possibility of late or default payments.
Specify settlement terms and late fees.
Setting out clear expectations from the start is absolutely essential since it notifies your clients when they can expect the invoice will be delivered.
For example, bill immediately at the completion of work, the due date (it’s due within 30 days of being sent).
Know the preferred payment method (credit card, PayPal), the ramifications if the invoice is not paid (late fees). Look for giving discounts if the invoice is paid early. The more specific you are in the beginning will ensure that there are no surprises later – which can delay getting paid.
Bonus Tip: Tighten your payment deadline to 7 or 10 days instead of 30 days or more so that you get the cash flowing into your bank account faster.
Make payments as simple as possible.
Ditch the paper invoices and switch to electronic invoicing. Not only does this speed up the invoicing process, it makes it as painless as possible for customers to pay the bills.
The bill is delivered to them electronically via email and then simply click a button to make a payment.
To make life even easier for your clients accept a variety of payments like credit cards, ACH, bank transfers, or digital cash like Bitcoin. If trust is a concern for you clients, work with reputable payment gateways like PayPal to put their minds at ease.
Another perk of using online invoicing software is that you can also set-up recurring payments if you have a subscription-based business or a long-term projects with specific clients.
Require upfront payments.
Don’t feel uncomfortable asking for a payment upfront. It’s perfectly acceptable and ensures both you and the client that you’re not going to give each other the short-end-of-the-stick.
What you ask for upfront, however, is completely up to you. It could be 50% down with the remaining 50% paid after completion of the project.
You could also require 50% upfront, 25% in the middle, and 25% at the end. If you’re being retained, then definitely secure a retainer.
Always follow-up on late payments.
We’ve found that only 18% of invoices are paid after 90 days. That’s why invoicing promptly is so important. But, it also proves that you need to follow-up with invoices by emailing or calling the client as soon as the bill is past due.
Invoicing software does this for by automatically sending upcoming payment reminders and “pinging” clients who haven’t pad their invoice.
While this feature can be a time-saver, don’t rely solely on automation to chase late payments. At the end of the day it’s still your responsibility to follow-up.
If you’re dealing with a deadbeat client, then you should have a plan in place, such as instigating legal and debt collection agencies.
Brand your invoices.
Did you know that you’re 3x more likely to get paid if you add a company logo to your invoice? Branding your invoices demonstrates that you’re professional and makes your invoices stand out so that they’re easily identifiable.
Most invoicing software allows you to easily personalize your invoices by letting you upload your logo and edit the font, colors, and even the layout to mirror your brand.
Thank your clients and customers.
Simply including phrases like “please pay your invoice within” or “thank you for your business” can increase the percentage of invoices that are paid. It was found that more than 5 % paid when the requester was being polite. These behaviors can establish and strengthen relationships.
Besides literally thanking your customers, you can also thank them by offering a discount for future work. Do this by sending them a link to a piece of content that they find helpful or enjoyable. You could refer them to another business that can help resolve a problem.
Ask for an assist.
Even if you’re a solopreneur, you may need some help with invoicing when you’re swamped. Invoicing software is a start since it automates recurring and basic tasks.
There will be times when you need an actual person to create, send, and manage your invoices. You could outsource these tasks to a freelancer. Hire an accountant or bookkeeper, or ask a colleague, employee, or spouse to lend a hand.
If you go with the latter, make sure that you’ve taught them how to effectively run the invoicing platform so that there aren’t any hiccups. If you don’t have the time, then show them where they can locate the training modules offered by the platform.
Double-check before sending.
Finally, make sure that you double-check all of your invoices before you send them. Look for any spelling and grammar errors, that it’s being sent to the right person and address, and that final amount is accurate.
It’s a simple habit that goes a long way in demonstrating your professionalism and speeding up the invoicing process.
Sending that $1,000 invoice to the client that owes you $500 is going to raise a lot of questions. The bill will probably cause some blood pressure problems when they assume that you’re overcharging them.