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Invoicing is both the highlight and bane of a business’s existence. On the one hand, sending out an invoice indicates a completed task and increased revenue. The process of invoicing itself, however, can be time-consuming and arduous.
As with anything, the right tools (click for more details) and structure can make invoicing for your business a breeze. Here are some of the best tips for creating more effective invoicing practices for your business.
Set a Schedule
Rather than approaching invoicing as an “as needed” aspect of your business, set a schedule and stick to it. The schedule itself will largely depend on your specific business needs. For example, if you have regular customers who subscribe to automatic shipments once a month, set a day once a month during which invoicing will be completed. If your job completion or invoicing requirements are less structured, set a day and time once or twice a week when invoices will be generated.
Setting a schedule means that there are specified times to complete a task, which helps ensure that nothing gets missed, overlooked or pushed down the list of priorities for an organization. It also gives you the control to set a time that is less busy than your peak days of the week or month.
Use a Tracking System
Don’t just send invoices into the wind and hope they come back with payment someday. Use a tracking system, so you know what went out, when it was generated, what it was for, how much it was worth, and when it’s due. Keep this system up to date so you can see which invoices are still outstanding past the given terms.
Keeping a well-organized tracking system will make month-end and year-end accounting much easier when the time comes. It will also help you ensure that you’re getting all of the money you are owed in a timely manner. Be sure to number your invoices, as this will make things much easier for accounting purposes.
Clear, Simple, and Detailed Documents
An invoice shouldn’t just be a number owing on paper. Nor should it be filled with text in a way that deters people from reading everything. The optimum invoice lies somewhere in the middle. Ensure your invoices clearly define what is owed, when it’s due, what the bill is for, and how to pay it. Make it easy enough that a six-year-old could pay the bill, so your customers have no excuse for not paying.
The invoice should also outline the terms you have agreed upon with the customer in question. This may seem redundant if you already have both an invoice and due date, but it helps clarify why those dates matter in accordance with your sales agreement.
Remind About Deadlines and Late Payments
Take the time to remind customers about upcoming deadlines. Many businesses avoid doing this out of fear of seeming like a pest. However, a gentle reminder can be helpful for those who have innocently forgotten about their upcoming payment. It’s also a reminder for those who are having financial issues and might be struggling to pay their bills that you won’t be forgetting about it, and should be prioritized.
After the deadline has passed, don’t hesitate to go after late payments. You can be polite and professional, offering a calm reminder of the payment terms, what’s due, and where they can send the money. Ensure that you’re creating a paper trail of your correspondence with the owing party so that if it ever escalates to a legal issue, you have proper documentation. These steps improve your invoicing process by reducing the occurrence of late pays.
Automate Whenever Possible
Automation is one of the main beneficial impacts technological growth and development has had on the business world. It makes it easier for small businesses to compete and give the service of a bigger, well-established company.
There are a few ways you can automate invoicing. Setting up a mail merge from a spreadsheet to integrate with your software or a word document can generate invoices with the click of a button, rather than having you manually type everything. Using your payment system to set up clients for recurring payments is another way to simplify things.
It’s time to leave behind the days of paper invoices and checks. There are too many convenient ways to pay for things for a customer to be using checks still. Give easy options for payment, such as credit card, eTransfer or platforms like Stripe and Paypal. Rather than printing invoices, keep everything online.
When one refers to building a paper trail these days, it doesn’t have to include physical pieces of paper. Not only will going paperless make your process more effective, it will make for easier tracking and cut costs on labor and supplies.
As a business, you should always be trying to improve your standard operating procedures to become more effective, cutting costs through processes and efficiency. Invoicing is a task that always has room for improvement and can make a huge impact on your financials.