How many times have you forgotten to send an invoice? How about having an invoice getting lost? Are you getting overwhelmed with this additional accounting task?
If you said ‘yes’ to any of those questions then it’s time for you to simplify your invoicing process. Not only will it guarantee that you’ll get paid on-time, it will also alleviate all of that additional stress that small businesses always dream accomplishing.
Sound too good to be true?
It’s not by using the following six techniques.
1. Create an Agreement
As a business owner you should already know how important agreements are. Without them, you could be greatly increasing your chances of getting stiffed. For example, if you were a contractor, you wouldn't agree to reinventing an entire office building without a contract in place prior to work. But, let’s say that you did and the job is finished. The problem? The person who hired has skipped town and is nowhere to be found. Without an agreement, there’s else you can do.
No matter what industry you’re in, you and the clients should be both agree on terms like;
- Your hourly/project fees or how much the job is going to cost.
- The scope of the project.
- How long the job will take.
- What types of payments you accept.
- The deposit amount.
- How long the client has to pay after the invoice has been sent.
- The penalties or interest that incur if the invoice hasn’t been paid.
Having an agreement not only protects you and the client, it also speeds up the payment process. In fact, those with invoice terms are 1.5x more likely to get paid on time than those without.
When the clients has this information, they’re less likely to ask any further questions when they receive the invoice. It may take a little work in the beginning, but it saves you a lot of time and financial headaches when you and the clients are going back and forth.
2. Easy-to-Understand Invoices
Another delay when it comes to invoicing is when the client has questions regarding what they’re being charged because the invoice is too vague or confusing.
That’s why you should keep your invoices simple, yet detailed.
Use a clean design and layout that is easy-to-read and contains information like;
- Your contact information.
- Invoice number - this a touch of professionalism, it will also make it easier for both you and the client track during tax time.
- Itemized description of your work - instead of “Wrote 10 Articles,” list each article title, when it was written, and how much each piece cost.
- Final cost.
- The due date.
Again, this takes a little extra work on your end, but it makes sure that the client doesn’t have any questions to ask when they review the bill.
3. Be Consistent When Sending Out Invoices
In a perfect world you would send out an invoice immediately following the completion of a project. However, that’s not always the case.
For example, your client may only do their bookkeeping on the first of each month, so it’s pointless to invoice them weekly. In other situations, you may not have the time to invoice daily - plus that makes it a mess when tracking which invoices have been paid and the ones that haven’t.
Instead, set aside a specific day and time to invoice your clients. It could be every Friday morning, every other week, or the first of each month. Whatever works best for you and your clients. This makes managing your invoices a whole lot easier and keeps the cash flowing back into your business.
Just remember though, the longer you want to invoice, the longer it takes for you to get paid. So try to invoice as frequently as possible.
4. Replace Paper-Based Systems
If you’re still using a paper-based system you’re doing yourself a huge disservice. These relics of the invoicing-world are frustrating, time-consuming, and can be easily misplaced. That’s why you need to make the move to a cloud-based invoicing system.
With online invoicing tools, you can send professional looking emails to your clients electronically. That means that they’ll pay you faster since you no longer have to use snail mail to send invoices and receive a check.
Speaking of payments, cloud-based tools allow you to accept multiple ways of getting paid, such as via credit card, direct deposit to your bank account, or third party payment gateway like PayPal.
Here’s some other awesome features that come with online invoicing software;
- You can create estimates and quotes and then convert them into an actual invoice.
- Set-up recurring or automated payments for recurring clients.
- Knowing when the invoice has been paid - or even viewed in some cases.
- Send automated reminders when an invoice is past.
- Customize invoices by adding your logo, brand’s colors, payment terms, and personalized messages.
These tools can also be used to track your income and expenses so that you can create an accurate budget and files your taxes painlessly.
In short, cloud based invoicing software handles all of your invoicing needs in one convenient dashboard.
I understand that money can get tight when running a small business. But, we live in an interconnected world where you no longer have to rely on the local town accountant to handle all of your accounting needs.
There are now freelance accountants who can manage your books - like creating, sending, and following-up on all of your invoices. While there are great sites to find these type of freelancers, try going the word-of-mouth route first. Maybe a friend, family member, or fellow business owner can refer you to someone who can take-over your books. Remember, they’re having access to important financial information, so you want to make sure that you can trust them 100%.
6. Limit the Amount of People Managing the Account
I know. I just recommend that you consider outsourcing your invoicing. The thing is, that’s still limited to just two people - you and the person you hired. By limiting the amount of people who have access to your invoices prevents any accounting issues like sending duplicates of the invoice, leaving out certain items on the invoice, or human error like not properly calculating the final amount due or taxes.
With less hands involved, the less likely you’ll run into any severe invoicing mistakes. Still need help? Here is a complete invoicing guide I put together with every step you need detailed out in a 6000 word guide!