You may have never realized that it takes the right chemistry to make invoicing a success for your business, delivering the revenue and cash flow you need to pay bills and sustain profitability. In chemistry, there are a number of elements that when combined, work well and make life-saving things like water and air, but other elements when put together are deadly. So, it’s important to know what works well together.
That’s why we have created a periodic table of invoicing, that goes into success factors to get you paid. We help you to know what elements go into the invoicing process and how to put them together for optimum results (e.g., getting paid). The periodic table includes Customer Factors and Business Factors.
Chapter 1: Customer Factors
Customer factors consist of a group of elements that influence how fast a customer will pay an invoice they receive from a company. As a business owner, the faster you can get your customers to pay their invoices, the greater cash flow you will realize. This cash flow is what helps keep your business moving ahead because there is money available to pay your own bills, provide yourself and team with paychecks, and delivers a way to expand your business with the available resources to stimulate this growth, such as the addition of new equipment, a larger sales team, or additional business locations.
The problem is that so many customers don't pay their invoices on time -- sometimes even waiting weeks and months to get you paid. That lack of response can quickly dry up your cash flow, leaving you to struggle to cover bills or write paychecks let alone even think of expanding operations. With no cash flow, it may require relying on credit cards, business loans, or invoice factoring just to get by.
However, by combining the right elements that the customer considers to be a factor in their decision-making process about when to pay invoices, you will be able to get your invoices paid on time and even upon receipt by the customer.
The next few chapters break down key factors and describe the elements related to those to show you why you must add them to your invoicing recipe. These customer factors include trust, security, personal, and choices.
Chapter 2: Trust
A customer has to trust who they are dealing with before they will deliver payment. While it may seem obvious that they would trust you based on your existing working relationship, they may still feel that the process you use to invoice and request payment is not something they feel completely comfortable with, so you need to ensure you add some elements in that will bolster confidence in your invoicing process.
If a customer can clearly identify where an invoice has come from, then they are more likely to go ahead and pay it. Do you have an invoice template that clearly identifies who you are for the customer?
An invoice template is an easy way to clearly identify who you are so the customer can make the connection when they receive the invoice. It's also a great way to reinforce your brand in their minds, offering a logo, company name, and even a tagline, if you have one.
Here are some tips:
Customers often do not pay an invoice because they have questions about the charges or are unsure about some of the information listed on it. If they can't quickly find who sent it to them or how to get a hold of them, they will toss it aside. You don't want your invoice collecting dust, so it makes sense that you give them what they need just in case they do have questions.
Do you provide all contact information so your customer can reach out to you if they have a question about their invoice, including a direct contact for the person in charge of billing in your company? Consider these actions to add this element to your invoice process:
Whenever you sign on new clients, it's a good idea to familiarize them with your invoicing and payments system, so they understand how to use it. Having this knowledge means they can pay the invoice quickly because they won't be lost about what to do.
Do you have a tutorial for new customers because this would provide a good way to onboard them to how you work? This is also a good way to reinforce your brand attributes and illustrate how you are making all aspects of working together convenient and efficient.
Chapter 3: Security
Security is on everyone's minds, especially with more stories related to data breaches and identity theft. That's why your customers will want to know how you will protect their information throughout the invoicing and payment process.
You need to consider how you address data and any risk of theft within your invoicing and payment systems to assure customers that handling these transactions online is more secure than resorting to the traditional invoicing and payment methods that take way too much time.
Everything has become about data -- customer data, personal data, and financial information data -- which must be kept private. Do you utilize a payments platform system with your invoicing platform that employs multiple layers of security to protect any sensitive data your customers provide to make a payment?
These additional layers of security can provide you and your clients with the protection you need from risk.
Identity theft has become a primary strategy for thieves because they realize how certain valuable data has become to help them commit other criminal activities. They can steal identities with social security numbers, birth dates, and other vital information that can allow them to open up credit cards in other people's names and wreak havoc.
You don't want to put your customers at risk. Do you use the latest technology to ensure all information is protected and encrypted?
Chapter 4: Personal
It's important to make the invoicing process all about the customer to get them to pay attention to it. After all, they are more about the work you produce for them and less about the payment part of it, so you have to find a way to make sure that they don't forget about your invoice.
This is where you can add custom touches to the invoices for their location, your brand attributes, past payment history, and any messages that can illustrate your personal connection.
Today's business environment has created a world of opportunity where you can work with anyone, anywhere, at any time. With technology, transactions have also become so much easier, further encouraging the pursuit of international customers. That means you need to customize your invoicing process to deliver an invoice that reflects your customer's country, including their currency, tax system, and even language.
Have you ever thought about the fact that just using your language and currency doesn't show your customer what you have done for them and how much it has cost them?
Did you realize that they will then have to either figure out how to pay you in your currency or decipher what your invoice means?
Earlier on, branding was noted as being a key way to build trust, but it is also a means of personalizing your invoice as a marketing medium. Have you incorporated your brand image to add professionalism and reinforce attributes? This element can be a way to reinforce certain messages about what you offer regarding value to your customers.
While branding may not help you directly to get paid faster, it does build the bond that you are working so hard to establish with your clients. The closer bond you form with your client, the more likely they will be to pay you on time, so there is an indirect connection.
While it may seem minor, including a history of payments and invoices on the current invoice is a very helpful way of getting your customers to pay you on time. This is because they don't have to think about looking up information they may be wonder about because it's all been detailed out for them.
Do you add a history of payments to show the customer where they stand with outstanding amounts? It is the little things that can make a huge difference.
Do you include a personal message that tells the customer just how much you appreciate their business and prompt payment? Again, it may seem like a minor thing, but it shows the customer that you are not just mindlessly sending out invoices but are, instead, looking at them as a communication channel.
The idea here is that you are not just asking the customer for money, but you are using it as a way to check in and connect with them on a project that has been finished, or that has reached a certain point in completion. It's acknowledging their needs and looking at the bigger picture regarding the relationship you are building with your customer.
Chapter 5: Choices
The last customer factor is choices, which is critical considering it's important that the clients think of their relationship with you and have convenience and ease come to mind. Today's business environment is about offering the most value, which often equates to as many choices as possible.
Due to technology, consumers and businesspeople are accustomed to accessing information and communicating on multiple platforms and devices, switching quickly between them and relying on all to be available when they want.
Not every customer is going to want the same type of payment method or channel for their central correspondence, so it's good to be able to offer a wide variety. This is also a way to attract even more customers because you can market the idea of your multiple options to get more work, which then turns into a higher invoice volume
This chapter discusses three main ways you can add choices to your invoicing system, including payments, mobility, and channels.
Do you offer a variety of payment options linked to your invoicing process so customers can pay by credit card, debit card, or ACH/e-check? While we have another periodic table devoted strictly to payments that delves into this element in a much more detailed way, it's important to include it as part of the invoicing elements to show the interconnectedness of these areas of your business.
The more ways you give a customer to pay you, the more likely they are to get you paid on time, especially if they know they can use their credit card. If you have business customers, they may prefer to pay by credit card to help their cash flow and be able to float expenses for another 30 days. When you help them out, they are more than willing to get you paid quickly.
Do you provide a way for customers to access their invoices from their mobile devices like smartphone or tablet? It's becoming one of the most important actions you can take to attract and keep customers not to mention as a way to convince them to pay you on time. Everyone is always on the go and not necessarily in front of their computers or their offices when you send that invoice.
If you are still relying on paper bills, your invoice may be already collecting dust in that envelope and be buried under a pile of mail awaiting the return of the person responsible for paying the bills. However, if you send an online invoice via email or text message, you are more than likely to get right in front of the person that needs to pay it.
If they happen to have a free moment, there will be a greater chance that they will pay it right away.
Do you give customers multiple channels that they can access information, including a dashboard, to find what they are looking for about the projects listed on the invoices? This means offering a way to share files and attach files to invoices. These features provide additional value that customers associate with you and your brand.
Open up every channel to them, including offering a cloud-based environment in which to work and conduct transactions.
Chapter 6: Business Factors
Business factors include the elements that provide the necessary tools for potentially speeding up customer payments. While customers have expectations that were noted as the primary factors in the first five chapters, you have the obligation of a business to deliver on those by enacting certain strategies and processes that can satisfy the customer in a way that motivates them to pay and, more importantly, to keep working with you.
These business factors are things you can control and change to make your company and way of working more efficient and directed at using technology to automate many tasks that often take you away from your primary focus on customers.
The elements listed in the next few chapters are intended to not only help you get back to what drives your business, but they also provide a way to improve your invoicing success by changing the processes and technology that you typically relied upon.
You will also find that the elements related to cost play a significant role in the business factors you need to address to enhance cash flow.
Chapter 7: Process
The elements related to process listed in this section can be beneficial, but they can also be lethal to your invoicing success if you are not careful. Think about what you are doing regarding how you conduct processes related to how you use your time, how you fulfill all regulatory requirements, and how you take care of invoicin
Overall, the goal is to create an efficient operation, but this can often be difficult to do for any business because they don't realize what is creating the inefficiencies. Look at the four elements listed in this chapter on Process as a Business Factor and see how you fare regarding the benefit or harm you could be causing your invoicing success and overall business sustainability.
Do you use paper processes for invoicing and payments that slows your cash flow to a trickle? Paper processes have been the traditional way to handle most aspects of a company, especially anything related to money, including invoicing, payments, and accounting not to mention HR, sales, and marketing.
However, what happens is that paper processes require a much more manually-intensive way of doing things that suck up all your time and can end up costing significantly more due to the supplies, materials, and labor costs involved. When it comes to invoicing, paper processes add on a lot of time, including what takes to create the bill, send and receive the bill, and then get the payment from the customer.
Sometimes, this can take 5-10 business days. Just think how long that means before you have money in the bank from that invoice. Even worse is that paper processes that involve manual labor can involve human error. Let's take that same invoice that took 5-10 days in total but that now has a mistake and must be redone. That's right, tack on 5-10 more days. Before you know it, a whole month can pass before you get paid.
Do you automate invoicing tasks, including payment reminders and receipts as well as invoice creation and recurring invoices? While the last element tends to do more harm than good, this one does quite the opposite.
This beneficial aspect frees up both time and money to deliver an efficient invoicing process for your business that works on your behalf while you focus on some of the more important aspects of your company. Automation is proving to be one of the biggest productivity drivers for today's businesses that are looking to do more with less.
Have you integrated other tools like time tracking, collaboration and file sharing, and project management so you can create an efficient operation? While the majority still believe that multitasking is good, it divides us into so many pieces that we are worse at more things than excellent at one thing.
The same goes with the software we have -- if we use multiple tools that work alone, they are doing an okay job, but if we were to integrate as many as possible together into one platform where they collaborate with each other, our productivity levels would skyrocket.
Take invoicing, for example. If we use a time tracking tool that keeps on top of how much time we spend on each project and then puts this time into a platform that automatically sends it to an invoice form, and a database automatically fills in the recipient's information -- then an email server sends it for us and integrates a payments platform within the email invoice. In this way, we have just had multiple tasks handled within one platform. That means fewer mistakes, less time, and more attention focused on nurturing our customers and making money.
Are you compliant with all regulations for payments, accounting, and taxation? Maybe you aren't even sure about all the regulations and compliance parameters that govern your industry. The bad news is that the regulatory and compliance environment continues to expand, especially given the increased use of online channels and payment systems.
If you aren't compliant, you could end up facing harsh penalties, fines, and even restrictions on doing business. Your liability as a business owner is increasing, so you want to make sure that if you are working in an online environment and charging for your services that all your processes follow the letter of the law.
This includes invoices and, while it may not help you to get paid faster, it does ensure that you are working in a legal manner.
Chapter 8: Technology
Technology is the cornerstone of all good invoicing systems and overall business processes within your business. It's also what has helped level the playing field with larger companies that had previously held a definite advantage.
Now, you have the power as a small business owner to use available tools and channels via the Internet to market, service, and generate revenue.
Technology is what has helped revolutionize traditional tasks like invoicing and turned them from a headache or nightmare into an enjoyable and quick job.
Have you added cloud-based technology to help you work and send invoices from wherever you are located? Cloud-based platforms enable you to work from anywhere at any time, accessing information that is continually updated no matter where you revised the data. This means what you input from your tablet will show up on your desktop or smartphone. It also allows multiple people to access the same information and make changes rather than having everyone work from different documents.
Since more people are working on their hours and from their chosen location, it means that you can always be working, including sending out invoices from anywhere, including that hammock on the beach or coffee shop booth.
Meanwhile, your customers have no idea that you are soaking up the sunshine as you hit the send button on their email invoice.
Is your technology speeding up your non-revenue generating tasks? The adage is that "time is money," and that still holds true today. Only now, you and your customers have elevated expectations about just how fast all your processes should work. With so much to do and handle, it helps to speed up as many aspects of the business that are not generating revenue so you can get back to the business at hand.
Of course, you don't want to go so fast that you make mistakes, so everything must be handled in a way that melds speed and accuracy, especially with invoices. Make an error because you are rushing and you will just have to redo and resend.
Is your technology delivering key insights and empowering you to make better decisions about productivity, how much you are charging, how much more work you can take on, and how you can improve your cash flow?
Another way you can increase your invoicing success is to add features like reports that chart and graph the data you receive to determine how time is spent, including how much goes toward revenue-generating activities so you can improve your estimates and quotes as well as schedule your work accordingly, know when to raise your rates or address your cost structure.
Those reports can also provide information about our customers that can help you service them better or see when there are patterns in when they pay on time or when they are late.
All of this data can give you a clearer picture of how your business is performing so you can find ways to make further improvements.
Chapter 9: Cost
The cost of doing business is going up while more small business owners are faced with smaller budgets, so the doing more with less mantra continues for most of us. The good news is that technology is coming to our rescue again with the solutions that can substantially reduce those overhead costs, often eliminating them altogether.
If you feel like the cost of doing business is impacting your overall profitability and invoicing may be one area that could change, it's time to see how the elements listed here from the periodic table could be to blame like unnecessary supplies and cash flow issues or should be adopted like an online invoicing solution to make improvements.
Do you spend money on invoicing supplies like paper, envelopes, stamps, and trips to the post office? If you do, you are creating costs that are eating away at your profits. Get rid of any process that requires these supplies, and you'll uncover an immediate bottom-line improvement.
No one needs ink cartridges, printers, or even scanners anymore when there are digital solutions that even allow you to sign documents legally online and send money without writing checks.
Are you experiencing gaps in your cash flow that require you borrow money or use invoice factoring to cover monthly expenses? This could mean you need to evaluate how you are billing and even whether you may need to raise your rates to start generating more money.
Cash flow is one of the most difficult tasks to undertake in business because it's all about timing. You want to have cash flow into the firm in a way that means there is enough available at the right time to cover bills that are due, pay your team and yourself, cover any unexpected situations or emergencies, and take advantage of opportunities to expand your operations.
However, your customers may not always see it that way because they have their cash flow schedule to optimize. With everyone out to get their cash flow right, you may wonder how you can ever get it to all work as planned.
Have you seen a reduction in overhead costs since adding an online platform for invoices and payments? This could be because your invoicing system is doing more of the work and requiring fewer resources to get it done than if you had a team of people or just yourself trying to do it.
Between the automation and digitalization of the various tasks associated with invoicing, you should start to see an overall reduction in expenses immediately. And, that fee volume should include the time you spent retracing how much work you did and when, creating and sending the invoice, and pursuing payment.
Chapter 10: Factors Work Together
Every factor related to invoicing on this periodic table are important, but those that are marked three carry more weight than those that are indicated by a one or two. There is no single element on this periodic table that can yield success on its own. Instead, there must be several parts that work together to increase the likelihood of invoicing success.
Concentrate on combining those customer and market factors in the right measure to optimize your invoicing success.