Invoicing is an important but often overlooked part of a business. How a company bills its clients impacts how well and how fast it gets paid for its products or services. Failing to have an effective invoicing system can slow down how fast companies get paid for the work they do, or worse, cause them to lose track of the payments they are owed.
On the other hand, effective invoicing can ensure a healthy cash flow, shorten the time between work provided and receipt of payment, improve relationships with clients, and can put your business in a stronger position financially.
Here are some great tips to improve your company’s invoicing practices today.
Get to Know Your Clients
One of the best ways to invoice effectively is to know your clients, and establish billing terms that make it easy for both of you to complete transactions in a timely and efficient manner. Keeping good records of returning clients is a good method to do this; seeking references for prospective new clients is another. Knowing who your clients are can help you avoid fraud, or forewarn you before dealing with a client who will be at risk of default when the bill comes due. By establishing good relationships with your clients, you can also help to set conditions that enable you to meet their preferences for services delivered, and yours for receipt of payment.
If you are a small business or sole proprietor and lack the resources or expertise to manage your invoicing, there is a solution: outsource it. There are numerous firms that offer effective invoicing services that can relieve you of the burden of managing this process, and allow you to focus on the core of your business.
While there will be fees involved, they will likely be less than the additional personnel, technology, or time you would otherwise have to invest in the invoicing process. Due for example, offers a state of the art invoicing service that can manage this process seamlessly and transparently for businesses of any size.
Embrace Invoicing Technology
Invoicing is definitely a practice where it pays to be an early adopter of technology, and it shows; nearly 25 percent of businesses are now using some sort of electronic invoicing to bill their clients for products or services rendered. Using electronic invoicing, and foregoing standard paper practices, offers businesses several advantages.
Most electronic invoicing methods enable you to send emails or text messages to clients, rather than standard snail mail paper bills; these are often read instantly and, if coupled with an electronic payment option, can facilitate much more rapid payments.
E-invoicing can also help eliminate paper waste in your company, which is not only good for the environment, but can help lower the amount your company spends on paper as well.
Follow Up on Late Payments
Regardless of how you bill your clients, some will inevitably fail to pay for goods and services on time. Sometimes missed payments are simply an oversight on the part of an absent-minded or overburdened client; other times the client is in dire financial straits and could not make the payment. In any case, when you have a late payment, follow up with a cordial message immediately; hopefully, that reminder is all it will take to get paid at last.
If, however, your customer is not able to pay for the services rendered, then consider alternative forms of payment, such as installments or even a reduced amount, in order to break even or to at least recoup some of your costs incurred in the transaction.
Finally, if worse comes to worse, you can consider turning the transaction over to a collection agency, chalk the transaction up as a loss for tax purposes, and make certain you record this client as one to avoid in the future.