Invoicing, despite being the backbone of businesses of all sizes, didn’t experience a revolution until recently. In fact, for decades the process was the same. You wrote down the services or goods provided, mailed it to your clients or customers, and waited for the payment to return. Even with the introduction of spreadsheets like Excel it remained a lengthy and expensive process. Within the last couple of years, however, electronic invoicing has completely revolutionized the invoicing. In fact, it’s never been faster or cheaper to send and receive payments. As if that wasn’t enough, e-invoicing can also make anyone become an invoice ninja.
The Real Cost of the Paper Invoice
Let’s briefly go over the true cost of paper invoice and why your business needs to ditch them. Permanently.
On average, paper invoices can range anywhere between $12 to $30 each. That’s because each paper invoice comes with;
- Direct costs, such as paper, ink, and postage. Electronic invoicing eliminates all of these direct costs.
- Indirect costs are the expenses needed to complete a task. This includes paying someone to input data to produce the invoice and place bills into envelopes.
- Hidden costs are waiting for the payment to arrive in the mail. These can also be disputes or errors regarding the invoice. It’s been found that this costs over $53 to rectify each paper invoice error.
The Benefits of E-Invoicing
Don’t kid yourself. Paper invoicing comes with real costs. Electronic invoicing, on the other hand, come with real savings.
I know. You’ve used tools like PayPal in the past and were hit with some pricey transaction fees. The thing is, online invoicing solutions have rapidly advanced lately. There are invoicing companies that are free to use and charge a flat transaction rate.
Due, for instance, charges a flat 2.8% transaction rate for all card types. Additionally, most platforms allow businesses to accept ACH, bank transfers, or bitcoin. These each are free or have minimal costs associated with them.
In fact, Concur has found that automation delivers an average of 29% reduction in invoice processing costs
Besides the savings, which also include savings on paper, ink, and postage, electronic invoicing system saves you and your employees a ton of time. That’s because you can set-up recurring payments and automated follow-ups. But, that’s just the the tip of the iceberg.
E-invoicing also reduces all of the work involved in creating invoices via a spreadsheet, capturing expenses and billable hours, and processing the client’s’ data. That doesn’t include all of the bookkeeping components of accounting like business Intelligence, taxes, and data storage.
How to Be an Invoice Ninja
Are you sold on the awesomeness of electronic invoicing? If so, here’s some crafty tips on how to use it to become an invoice ninja:
Make invoicing easy.
Invoice masters can convert quotes or estimates into invoices to make this process even faster. Even better? Tools like Flint allow you to capture payments on the spot by snapping a picture of a customer’s credit card to process a payment.
Capture all of your work.
If your business generates income based on billable hours or completed tasks and projects, then you’ll need to have a system that captures and tracks all these elements. Tools like Due come equipped with a time tracking tool so that you can accurately capture and invoice your billable work.
Make your invoices stand out.
Include your company logo and colors so that your clients can immediately recognize your invoices from others. This also demonstrates that you’re a professional which speeds-up payments.
Also prominently feature your terms, amount due, date, and payment options. Also utilize the carrot and stick approach. This is where you offer a 2% discount if payment is made within 10 days or charge a 5% penalty for payments after 30 days.
Give your customers payment options.
When your customers have more payment options, the more quickly they’ll pay the invoice. That’s because they can pay the bill with an option that they trust and know how to use with ease. Payment options could be credit or debit cards, ACH, PayPal, digital wallets like Apple Pay, and eCash like bitcoin.
Automation, automation, automation.
The main advantage of electronic invoicing is that you can automate the entire invoicing process. Automation includes recurring payments, payment notifications, and late payment reminders. Most platforms will even automatically transfer the payment directly into your bank account.
An Invoice Ninja Strategy
Beyond those tactics, you can expand your invoicing best practices by also doing the following:
Require upfront payments.
You no longer have to wait until a due date to get paid. You can require upfront payments prior to working with the client by asking for 50% in advance, 25% midway, and 25% when the project is completed.
Electronic invoicing gives you the chance to strengthen the relationships with your customers by literally saying “please” and “thank you” to them. You can also attach a file or link to content that your clients could use to enhance their business.
Cross and up-sell additional products or services.
Remind the clients that you have additionally products or services to sell by attaching a brochure or offering a discount on future work.
Invoice the right person.
One common mistakes that invoicing newbies make is assuming that their contact is the same person responsible for issuing payments. That may be the situation if you’re working with a small business. But chances are that your client actually has someone else managing their bills.
Find out who the individual is in charge of payments so that you can directly email them the invoice.
Benefits of Becoming an Invoice Ninja
As Miranda Marquit explains in a previous Due post, “With my last business invoicing tool, once I had more than three clients, I had to pay to use the service. While there were some perks that came with it, I didn’t use them.”
With Due, you “can add unlimited clients without having to buy an extra product.” You can also bill as many clients as you need to without the extra cost.
You’ll be on your way to becoming an invoice ninja in no time.