Automate your invoicing and payment methods to improve cash flow
Almost no other sphere of the professional services industry takes up as much manual time and wastes as many productive hours as checking, chasing, and reconciling payments.
Bringing reliability into your cash flow and payments requires solid processes, modern automation options, and great visibility into your customers’ payment habits. The key is to make the whole process easier. It should be easy to issue correct invoices on time. It should be easy for your clients to pay your invoices by any means they choose. And it should be easy for you to track who has paid and to see a clear overview of this on a business-wide level at any time, and immediately.
So what are the challenges and solutions to improving these processes?
Reliance on traditional payment methods
Many companies modernize all aspects of their business yet fail to step into the modern world regarding arguably the most important part of running a business – getting paid. It’s pretty surprising how many businesses still use one, several, or all of the following options.
While cheques have not been used in Europe for over a decade, Australia and the UK have not phased them out completely. By contrast, cheques are still widely used in the USA and account for around 50% of all Business to Business(B2B) payments. FT Partners calls the use of cheques in the US ‘the last bastion of paper-based payments and processes’. The drawbacks of using paper cheques are myriad. The money will take several days to become available in your account, presenting a high risk of fraud and human error.
The most popular and widely adopted method currently in use, the bank transfer has several benefits that elevate it above the paper cheque, but it comes with its own series of challenges. As it is a push payment method, meaning it needs a manual action initiated by the payer, bank transfers lead to higher debt amounts and delayed payments. Customers often simply forget to make payments, or, if they have failed to set up their account beneficiaries correctly, can be subject to human error, such as incorrect account numbers or business names.
This is the fastest-growing sector in the B2B sphere, but until recently, it was quite problematic. Business owners had to complete a load of paperwork to get set up with a financial institution to enable the acceptance of cards while reconciling payment information against invoices remained a manual process. The rise of global providers and their integration with work management software has removed many of the obstacles and make this the B2B payment process of choice for modern, forward-looking companies.
The power of automated invoicing
Professional Services Automation has become the leading buzzword in the agency, consultancy and knowledge industry. Essentially, it means software that connects, automates, and streamlines all operational aspects of Professional Service Organizations (PSOs).
What good PSA software allows you to do is manage every part of your project cycle, from pitch to paid centrally. From the basics of adding a project, assigning staff, managing budgets, and logging expenses and time, many firms are now adding the final layer, invoicing payments and recording payments into their systems.
There are many benefits to using PSA software for invoicing. By centrally managing the issuance of invoices and the capturing of payment details, you no longer have to spend time creating invoices and then checking outside your work management platform for completed payments before manually reconciling the data.
How does it work?
Software like Scoro allows you to generate an invoice directly from quotes, timesheets, or customer orders, with all the information needed. You can set up scheduled, partial, or recurring invoices and even automated payment reminders at the frequency of your choice.
Best of all, you can make it really easy for your clients to pay your invoices by using the Stripe integration. This allows you to embed a payment link directly in the invoice or email, which your clients can pay using a debit/credit card or bank link from any device at any time. The ease of use and immediacy of this method is guaranteed to drive faster payments. Any payment completed using Stripe is automatically logged against the client and invoice in Scoro, giving you an up-to-the-second overview of your finances and ensuring your records are 100% correct.
Keeping your invoicing and payment system in one integrated software like Scoro saves you a tremendous amount of time and effort.
You can read about the benefits of using this integration in much deeper detail here.
Invoicing best practices for fast payment
While automating your invoicing and payment system is the single biggest change you can make to get paid faster, there are several other things that will help you bring predictability and visibility to this important part of your business cycle.
- Be very clear on payment dates
Never send open-ended invoices with no specific date by which you expect payment. We suggest making your payment schedule expectations clear during the negotiating phase of any project. An invoice due immediately upon receipt will obviously get paid faster than one with a due date 30 days later, but don’t spring surprises late in the game.
- Turn on the charm
Research shows that invoices or payment notifications that contain simple words like please and thank you get paid on average 2% faster than those that don’t. If you know who is checking the invoice by name, it’s easy to automate this personalisation inside Scoro and address them correctly.
- Give your clients options
Including multiple payment methods makes for happier customers. Communicate their options clearly, find out what works for them, and set up your automated invoice templates accordingly.