How to Improve Your Invoicing Process
Invoicing plays a vital role in business accounting, and no serious business owner should dare ignore it. Whether your business is small or large, you certainly would not like to see any of your cash flow outstanding due to invoicing issues. If you are experienced this billing problem and are looking for ways to solve it, you are not alone. Whenever business owners talk about what they require for an effective billing process, they are basically looking for a business billing procedure that is easy to use and encourages their customers to pay on time always.
Most of your clients will not make payment at the right time unless you ask for it. However, no matter what your current invoice process is, here are a few things that you can do to help enhance not only time payments but also customer relations.
Set Up Your Billing Terms
By establishing the billing terms for your business, you increase your chances of getting paid on time and maintaining healthy customer relationships. Among other things, you should make sure you set the billing deadline and the consequences your customers who do not meet this deadline face. Outline this expectation with any customer before you enter into a contract. Since your business needs cash flow, the only way to achieve that is to get paid promptly and setting billing terms will help you to achieve exactly that.
Take Your Time and Bill Appropriately
The key to long-term success in this game is taking your time to get the payment process on the right track right at the beginning. While maintaining clarity and readability, you should incorporate all essential details on your business billing system to portray that your company embraces professionalism. You need to ensure your clients know what the document is at one glance by labeling it as an “invoice.” Also, it pays to list out all the products or services you are billing along with unit prices, applicable discounts, taxes, and the total amount you are expecting to collect.
When mailing your business bills, you may consider including a return envelope for your clients to return payment. This step makes the process of sending you money easier for your customers. But you can still make it much easier by pre-printing your address on your envelopes.
After some time, you may find your customers not using the return envelope. Some people prefer to pay online or in person. And since that return envelope will increase the weight of your mailing, it may require you to dig deeper into your pocket and pay more money. So, it is prudent to provide cheaper payment options to encourage your customers to use them, whenever they find it convenient.
Be Human Always
Being human can involve doing small things such as making polite phone calls to introduce you as the one in charge of payments. This seems like a small gesture, but will often achieve much more than emails sent to individuals who do not know you. The kind gestures might also help smooth out any misunderstandings that arise in the future and get you more work.
Choose the Right Currency
Most small-business owners find deciding which currency to use to be a complicated aspect of billing foreign companies. A good time to settle this issue is during contract negotiations with the customer. After knowing the currency to use, the next most important things that you need to have in mind are exchange rate fluctuations and bank charges.
Bank charges and exchange rates can make transaction very expensive. You may decide to share these costs out of good will with your customer to encourage them to trade with you and pay promptly. But before doing that, it is sensible to take financial advice.
Get the right invoice software to make it easier for you to account payments in multiple currencies. Your software will allow the application of zero-rated and low-rated sales taxes for your foreign clients. But it will still account for all sales in your records.
State Clearly Your Accepted Payment Methods
Some payment methods mean more spending on the part of your business. For best returns, you need to balance the costs against the ease of payment for your clients and make an informed decision. You can also differentiate yourself by accepting new crypto-currencies and many other alternative methods of Internet money transfer. However, at the moment you should be more careful if you want to use these new currencies since their exchange rate to “authentic” currencies can be extremely unpredictable.
File Documents for Future Reference
You need to have a system in place that will help you when going after late payments. An accurate document trail can of great help to you. So, you need to keep track of requested changes in writing and record communications and telephone conversations about invoices. You will do well if you either consider using invoice software that track payments or asking your financial advisor for suggestions on ways to do this on your own. Every time you send a bill put the details into this system and record the exact dates when you receive payment for the best experience.
Make Collection Calls
Nothing is more effective at helping business owners to clear up misunderstandings than making telephones calls. Occasionally, your customers may fail to pay you promptly due to misinterpretation of some of your communications, and these calls can bring back the desired harmony. For these calls to have the greatest impact, you have to adopt a matter-of-fact manner and presume good intentions on the part of your clients. During these conversations, you need to settle on a specific amount due and the expected date of receipt. If you are concerned about damaging client relations, have some else make the collection calls on your behalf.
All that you need to get paid faster is a combination of the right attitude, invoice software that will help you to bill your customers appropriately, and the relevant billing processes. Once you have accurately set up your payment process, it should be able to run smoothly and without much difficulty.
As a business owner, you may be short on time given the many roles that you play to ensure your business is profitable. But taking the effort to ensure your invoicing process is efficient and easy is a decision that will pay off handsomely at the end of the day.