10 Easy Steps to Improve Your Billing Process Right Now
For a small business, billing can often be a nightmare. Even after the tedious process of sending out the invoices, there’s no guarantee of on-time payment. It’s a time-consuming cycle. However, it is an essential part of the business. That is why it’s important for small businesses to have an efficient invoicing system in place.
Are you a business owner looking to get paid on time and worry more about your business than the bills? Here are 10 easy steps for improving your billing process right now.
1. Set your terms
Before you start working with a client, you should both agree on a set of terms. It’s the basis for good customer relations, it helps you avoid surprises, and increases your chances of getting paid on time.
The terms should clearly state:
- whether you bill hourly or by the project;
- your fee and any additional fees;
- when the project is to be completed;
- the types of payments you accept;
- a timeframe in which the client is expected to pay the invoice;
- the penalties charged to the client if the bill is past-due.
2. Optimize your billing times
When should you send the invoice? Cashflow forecasting software Vistr analyzed 300,000+ invoices and found that a lot of companies invoice as jobs come in. While it’s good practice to invoice as soon as you reach key invoicing milestones, it can be inefficient. The key takeaways from the research were:
- If you are invoicing weekly or fortnightly – start sending invoices on the weekend.
- If you are invoicing on a monthly basis – start sending invoices on the 1st of the month.
You can improve your cash flow significantly, as invoices sent on weekends are generally paid within 29 days, a full 10 days faster than invoices sent on Tuesdays, Thursdays, and Fridays. As for the monthly invoicing, invoices issued on the 1st day of the month was paid in 30 days. Invoices issued on the 30th were paid in 38 days. By issuing an invoice on the 1st, you will improve your cash flow by getting paid a whole week faster!
3. The science behind getting paid (on time)
Turns out timing is important. But that’s not the only ingredient in getting paid on time. Online payment service Due analyzed over 250,000 invoices sent over the past year. Here’s what they learned:
- If you put terms on your invoice, you are 1.5x more likely to get paid on time.
- You are 2x less likely to get paid if you have more than 4 people on the invoice. Everyone opens and looks at the invoice, but nobody claims responsibility and pays it.
- You are 3x more likely to get paid if you add a company logo to your invoice.
- You are 8x more likely to be paid on time if you put a due date to your invoice. This may sound logical, but almost 1 out of every 4 invoices sent is sent without a due date.
- If you haven’t been paid within 90 days, only 18% of those invoices get paid.
4. Minimize errors
Invoice errors can cause mistrust and confusion between you and your clients. Considering the importance of bills, you’d think that we did everything possible not to make any mistakes. However, invoicing errors are more common than you might think.
Tip! Efficient billing software will automatically compile costs and quotes, or tracked billable time, and generate invoices from this information. This reduces the number of people required to produce quotes, thereby reducing the chance for human error. This, in turn, saves your business time, and ultimately, money.
5. Automate, automate, automate
Simple automation features can make your payments faster, and save yours, as well as your clients’ time.
There’s more to billing automation than automatic quote compilation. Some of the most impactful automation features let you:
- set up recurring billing schedules to automatically charge any recurring fees;
- automate overdue invoice reminders;
- process invoices online so that your customer can pay you anytime using a payment method that works best for them;
- create invoices based on your proposals, tracked billable time, or their combination;
- issue sales, prepayment, and credit invoices.
6. The holy grail of hassle-free billing: billing software
For a small business, a spreadsheet might serve as an efficient monitoring system. But here’s a fact to consider: companies that manage billable hours on Excel spreadsheets are likely to make more mistakes and end up sending inaccurate invoices to their customers.
So, as your business grows, billing software becomes an increasingly worthwhile investment.
If you’re looking for a billing software for an agency, legal service, freelancing business, or any other industry where the standard charging procedure is by the billable hours – you’re probably looking for a solution with time billing functionalities.
Read further: Time Billing Software – Everything You Need to Know
If you’re a vendor, you’ll benefit from extensive ERP features. If you’re offering a subscription service – it’s the recurring billing features.
There is a variety of software with different functions at various price points. Before settling for billing software, it is important to take that into consideration and make sure you’re opting for the right software for your business.
That being said, no matter the feature set – a good billing software will save your company countless hours by eliminating manual data entry and constant follow-ups.
7. Forget spreadsheets, get in the cloud!
In today’s business environment, it’s all about flexibility and accessibility. If you’re still relying on paper or Excel-based systems to bill your clients, then it’s about time you switched to an online solution.
At this point, there is no excuse for not having a cloud-based system in place that can track and send out invoices promptly. Not only does this speed up the billing process – it gives every relevant person a real-time overview of the current situation, eliminating dated data and manual errors.
Need to work remotely from home or on the road? When you use cloud billing software, it’s easy to work from any off-site location to keep your accounts up-to-date and stay on track. You’ll always have the most current version of the accounts, and you’ll never have to worry about losing your data.
Starting in 2018, every company in the EU is required to use e-invoices. Some countries already require freelancers to use e-invoices in specific government-approved formats, and The United States and many countries in Europe and Latin America have already implemented e-invoices in the public sector.
Cloud-based invoicing software makes it easier for companies to handle any needs for tax authority audits, insurance claims, banking disputes, and more.
You’ll get used to the convenience and cost-effectiveness of cloud-based invoicing quickly, and your clients will enjoy the new system as well.
By integrating your currently used tools with your billing software, you unlock an extensive set of features. You can capture and manage every billable event, across your entire business!
- Integrate your invoices directly with popular payment gateways.
- Integrate with your accounting software for simple, real-time updates.
- Integrate with your pipeline management system, and never miss an opportunity.
- Integrate with your project management software and make sure every pound is billed accurately and on time.
From the initial quote all the way through collecting payment – by connecting a set of systems, individual processes and administration can be significantly reduced.
9. The central location for everything
Whichever solution you use for billing, it won’t be effective unless you use it to collect and sort all of the connected data, including proposals, customer data, invoices, and other information relevant to each customer’s account. Every piece of billing-related data should be at the fingertips of the people who need it.
The era of small tools that only solve one specific problem is over. The future is in comprehensive work management solutions that become a central place for every aspect of the business.
A good online project management software takes care of everything from the first proposal to the final invoice. It wipes out work chaos and simplifies everything from team management, real-time collaboration, and budget allocation, as well as tracking and reporting.
Infographic: The Evolution of Project Management Software
10. Make billing a priority
The billing process of a company can be just as important as the product or service that they sell. If a customer is not happy with payment terms or it’s hard for them to pay they will most probably choose to look elsewhere for their business.
Knowing how to efficiently handle billing process can greatly impact the reliability and reputation of a company.
For a small business, billing can be overwhelming. But it doesn’t have to be. By utilizing these tips, you can get paid faster and focus on what really matters – your business.