When you’re a small business, every dollar counts. Expenses should be efficiently managed, and receivables that come in need to be collected timely.
Because income can often be so close to expenses as they get started, a lot of small business owners stick to strict cash-only methods. But many clients prefer to work with companies that invoice them or offer flexible payment options. You could be missing a large target market by limiting your payment terms.
What you need is a solid billing strategy, not a limited way to collect money.
You don’t have to pay big bucks for a fancy software program to get the job done, though. If you use these tips to create your billing processes, you can effectively and easily streamline your income and expenses!
1. Decide on Your Payment Terms
You are ultimately in charge of your business. If you decide it’s best to go cash-only, or you prefer to invoice your clients, that’s your choice.
It’s also acceptable for you to design a policy where clients can earn the invoicing privilege or have a cap on how much they’re allowed on credit.
For example, if one client has been paying their invoice on time for months and they want to increase their regular order, that’s an easy yes.
But, say you have another client who has the same order but takes months to pay. They also want to increase their order. However, waiting months for payment on your goods could put you out a lot of money and hurt your business.
You get the final choice as to accept their order, request a down payment, or decline it altogether. Another option is to look into invoice factoring and other payment alternatives.
The schedule of payment is your decision, too. Do you want your invoices to be due in 15 days? 30 days? Upon receipt? Make your payment terms clear upfront and on your invoice.
The other thing to remember is that if something isn’t working for you, you’re allowed to switch the terms. If you already have a template with your payment terms that you send clients, it’s easy to update it with the changes. Before you enforce them, be sure to give ample warning to all of your clients.
2. Set Up Automated Invoicing
Having an automated invoicing process is going to save you tons of time and headaches in the future.
When you automate your invoices, you set up your billing program to schedule them in advance to be sent out on a certain date and time. Instead of once a month billing, no matter where the client is in their payments, this personalizes the invoice.
Automated processes can be tweaked to send reminders to clients before their bill is due. You can switch the program to send certain customers invoices every two weeks, and others to get their bills once a month, for instance. If you need an invoice for a one-time client, you can print that manually.
Using an automated invoicing system streamlines your billing processes so you don’t have to spend crucial hours doing the job.
3. Enhance Your Communication
We all know the dangers of miscommunication. In your business’s billing strategy, this can cost you a lot of money.
Miscommunication doesn’t only happen when you get a message across wrong. It can be talking to the wrong person to collect your money, delaying your payment. When you start work with a large business, find out who you need to work with directly to get authorization to pay your bill.
It can also happen if your terms aren’t clear. Having a payment terms contract is important, but you also need to tell the client directly to clarify any confusing points.
This is especially crucial if you’re working on a large project that will cost you labor, supplies, and time before the client pays.
Be sure to let them know the payment options you have available, such as credit card, check, PayPal, etc. Discuss the budget they’re working with, any deposits required or payment intervals before the project is finished, and the final due date.
Put all of this information together in a contract or agreement. Give a signed copy to the client and keep one for yourself.
Conclusion
Your invoicing process should be simple and streamlined in order to be effective. When it’s easy for you to put together and send out and clear to the client, you’ll get paid faster.
Occasionally, clients will pay late or avoid paying entirely. But with this three-step strategy, your billing process will be something that runs like clockwork. You’ll be able to catch and handle the hiccups when they happen, not when they’ve turned into an expensive problem to fix.
I’m a 20-something stay-at-home mother and wife. I have an amazing husband, a beautiful daughter, two loving dogs, and a lazy cat. I wouldn’t change my life for anything! I love to read, listen to music, cook and blog!
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