Running a business entails getting so many things right as it requires you to be a leader, entrepreneur, and manager. Among all the facets of your business that you need to understand, your finances and accounting are arguably the most critical. Think of it this way: if your finances are unable to sustain the day-to-day operations, you will begin to make a loss and eventually have no business left.
The heart of your financial management is your invoicing and billing process. These two will determine the cash flow in your business, which is why it should be streamlined to run consistently and efficiently. Some businesses still insist on running their invoicing process manually, which can contribute to business failure due to errors and paper trails that are hard to track.
Thankfully, you can adopt the following ways to promote consistency and efficiency for your invoicing process:
1. Automate the invoicing process
If you’re dealing with many clients and have to generate recurring invoices for all of them, you should steer away from manual processes. Doing it manually only increases the chances of errors and eats a lot of your productive time and money.
You can opt to get invoicing software from reputable companies, such as Jobber, designed specifically for the field service industry, which automates the whole process. That way, you can efficiently dispatch estimates and create professional-looking invoices for your clients. Additionally, data will be updated in real-time and every payment can be tracked, which provides better financial visibility. In turn, your business will keep accurate records and can make more informed financial decisions.
2. Create detailed invoices
The invoice that you send to your clients should be simple and professional looking but should capture all the important details in the business. First, the invoice should have your business name and logo in it so clients will know what company and services they’re paying for. Secondly, indicate that it’s an invoice so clients can quickly identify it among other documents. Finally, include the date, invoice number, list of items, and final price.
If you’re in the cleaning business, for example, use this free fully customizable invoice template for cleaning services that’ll help tell your clients what they’re paying for. You might be able to find something similar for your business niche. These templates are essential in maintaining consistency and efficiency. The templates can also help in formatting, business information, and calculations needed to streamline the invoicing process.
3. Remind clients of deadlines
Clients can easily forget to make their payments, which will affect cash flow, especially if you have to pay bills. So, you have to remind them to make their payments in time. But you should avoid pestering them. Instead, you can send reminders one week before or a day before the due date. If you charge fees for late payments, then reminding them will be an excellent way to help them avoid the extra charges, which they’ll appreciate.
If a deadline passes and you haven’t been paid yet, make a follow-up as you have the right to. Send a polite reminder containing the invoice number, amount to be paid, and the due date. Sometimes, the missed payment could be a mistake or a glitch in the system, so handle it professionally.
4. Establish clear terms upfront
Before making any deal with a client, you should have established terms that guide when and how you’ll be paid. Explain to your clients the payment terms and policies. This way, when you’re sending them an invoice, they won’t be surprised. Also, when they know when the payment should be made, they can prepare their finances so you’re paid in time.
You can also discuss the payment method they prefer and if your business supports it. This will enable both parties to feel equally comfortable about the payment terms.
5. Send invoices as soon as possible
When sending invoices to clients, do it as soon as you complete a project or after delivering a service or product to them. This will help them make faster payments to keep your cash flow consistent. Also, it helps avoid losing track of sent invoices as you can get mixed up when dealing with several clients.
If you’re sending recurring invoices, send them on the same date every month. Automation can help with this, hence you’ll maintain professionalism and consistency in your invoicing process.
Your invoicing process is very crucial in your financial management, and subsequently, in running your business. So, you should abandon any practice that could lead to errors, inconsistency, or show a lack of professionalism. Instead, try the different ways discussed in this article to help improve the whole process.