How to Streamline Your Invoicing Process
Streamlining your invoicing system is extremely beneficial for business owners of all-sizes. A streamlined invoicing system gives you a greater peace of mind. Streamlining also allows more time to focus more on meaningful tasks that can grow your business. You will benefit from the increase in cash flow. It’s a win-win.
How exactly can you streamline your invoicing process?
Here’s some helpful tips to get you on your way.
Get Invoicing Right From the Start
Invoicing is more than just sending a payment request to a client or customer. It requires an efficient process from the get-go so that you can paid on-time. Getting paid on time will improve your cash flow.
That requires you to break out of your comfort zone and start rethinking your entire invoicing process. This may sound like a lengthy and complicated process, but implementing a proper invoicing procedure simply involves:
1. Knowing how regularly you want to invoice.
Should you invoice regular clients on a monthly, biweekly or weekly basis? That’s going to depend on your business.
For example, it’s not uncommon for freelancers to invoice their clients weekly, while manufacturers typically bill bi-weekly or monthly.
The best way to determine this is speaking with your clients and finding out their payment schedule. They may issue payments biweekly, specifically on the 15th and 30th, for example. If so, then you would bill them on those dates.
2. The types of payments you accept.
Accepting a variety of payments, such as credit cards, PayPal, ACH, or bitcoin, makes it easier for the client to pay the invoice. However, look for payment options that are also convenient and affordable for you. Work to decrease the time it takes to clear in your bank account and avoid expensive transaction fee.
Due, for example, charges you a low 2.8% transaction and payments are processed within one to day business days.
3. Clearly defined terms.
Establishing easy-to-understand will encourage clients to pay you as quickly as possible. Avoiding jargon like “net 30,” when establishing a due date. Instead, use “30 days” so that the client understands that payment is expected within 30 days. Consider offering incentives for early payments and late pay penalties if the invoice is not paid by the due date.
4. Creating professionally designed invoice.
If you want your clients to take you more seriously, and pay your invoice on-time, create professionally designed invoices. Including your logo, brand’s colors, and essential information helps with your branding.
Adding your full name and address, your client’s name and address, invoice date, and invoice number gives a professional feel. Itemized breakdown of services, the invoice total, due date and available payment methods provide extra care. If applicable, also include any discounts, legal requirements, or sales tax.
5. Following-up on late payments.
When it comes to invoicing, you have to be proactive. If a client has missed the due date, then contact the client immediately and find out what’s going on. If the client avoids you, or refuses to pay, then you may have to take other steps.
If you have international customers than you also need to use internationally valid account numbers. These numbers include IBAN, BIC or SWIFT codes, as well invoicing the client’s in their preferred currency and language.
Utilize Invoice Processing and Workflow Automation Technology
A proper invoicing process is a good start, but utilizing the right tools can take your invoicing to the next level. For instance, online invoicing software stores all of your billing information on the cloud.
This means that you can access your account whenever and wherever you like on multiple devices. You could be sitting in the airport, log into your account, and send a last minute invoice to a client since their address is already stored.
These tools can also track and monitor the invoices that have been paid, are pending, or even when the client views the invoice.
Additionally, these tools allow you to automate the invoicing process. They let you convert estimates or quotes into invoices, set-up recurring invoices. You can send payment reminders, and “ping” clients until they pay the invoice. They can even notify your clients or customers when their credit card that you have on file is about to expire.
Platforms like Due also come equipped with a time tracker so that you can accurately track your billable hours and expenses. They also integrate with accounting platforms like QuickBooks so that you can streamline your entire business’s finances.
Don’t forget to implement capture automation software, like Optical Character Recognition (OCR). This is done in your back-end accounting system so that you can scan receipts, paper invoices, etc.
This process reduces errors from misreading hand-written notes and makes it easier to access when needed. If a client has misplaced an invoice you can readily resend it. You can readily reproduce any information should you ever be audited.
As previously mentioned businesses that implement centralized scanning solutions can convert images, such as receipts, into computer-readable text. This eliminates the need for a human to enter data manually into a system.
You will be saved both time and money in your business. However, you need to determine where to store this information since you’re no longer using filing cabinets.
While a cloud-based invoicing system will back-up and store all of your invoices securely and offsite, you’re still required to store paper-invoices and any other related documents like receipts for 7 years.
This means that you may need larger online storage so that these documents can be scanned, organized, and accessible. Consider cloud-storage solutions like Dropbox. Zoolz, or Egnyte.
Enlist Outside Help
If you’re still spending an excessive amount of time invoicing and collecting payments then you should consider delegating some of your bookkeeping responsibility. Consider an assistant, freelance, bookkeeper, or accountant.
You could also consider hiring:
- A credit manager or accounts receivable clerk that will handle your billing and follow up on invoices.
- A collection service or officer to deal with any large-scale long overdue bill.
- A legal advisor if you have a client who refuses to pay the invoice.
Then you can get back to doing what you’re good at — building your business.
Take Preventive Measures
What if you have larger accounts? If you’ve been working with a reliable client for years, then there probably isn’t much to be concerned about. But, what about new clients or clients who aren’t as consistent?
Requiring a down payment or any other sort of upfront payment can help handle your expenses. Upfront payments help you establish a budget, and prevent chasing down late payments.
Additionally, having an agreement in place prior to starting on a project will also protect you if a client doesn’t pay in a timely manner.
In some situations, you may want to look into payment insurance. By insuring your accounts receivable you can protect your sales against any possible non-payment risks.
Some policies will even protect you from commercial risks, like if your client goes out of business. It’s a fact in today’s world there will be changes in ownership, filing of bankruptcy, even a natural disaster.
But more likely is the problems of the economic climate issues and seasonal hardships. With insurance, you can protect yourself against these.