Cash flow is king when it comes to running a business. When it is not properly managed, it can start a trickle-down effect of complications for the business owner – including the inability to secure funds to operate the business. If you’re in the business of providing goods or services to customers upfront, it is ideal to set up an invoicing/billing system to ensure the cash keeps coming in.
While larger companies have entire accounting departments that take care of their invoicing needs, as a small business owner you’ll likely need to look to other resources to help automate your invoicing system. With the help of tools like invoicing software and the ability to collaborate with companies like MicroDynamics Group, which offers printing and mailing solutions for invoicing, you can run your business just like the big boys.
Below are a few more tips on how to get your billing and invoicing system up and running.
1. Consider Software
When it comes to automating any processes, technology is often the first resource to look to. Often times accounting software companies like QuickBooks or FreshBooks has accounting and invoicing platforms that you can use to your advantage. Such software allows you to setup customer accounts, generate one-time or recurring invoices, and even keep track of when invoices are paid.
2. Set Your Payment Terms
While you may want to give your customers time to make a payment on products or services, you don’t want to allow too much time to pass. Typically, payment terms are about 30 days or less. As you’re setting payment terms, also remember to offer more than one platform for payment. While some customers may prefer to mail a check or pay by phone, others may prefer options like mobile payment systems so they can manage their bills online. Remember, the idea is to give a little leeway for payment and various methods so that they don’t feel inconvenienced.
3. Use Clear and Professional Language
To avoid the possibility of miscommunication you need to draft invoices and related materials in a clear, polite, and professional manner. Using language that is not easy to comprehend could cause more confusion than it’s worth. Clearly state the account, what the payment is for, how much is due, and when it is due. Remember to use please and thank you throughout the correspondence as this can make a big difference in your customer rapport.
4. Send Invoices Right Away
Waiting a long time to send out an invoice can cause the customer to forget about the bill altogether. After you’ve rendered a service or shipped a product you should send an invoice within a week of completing your end of the bargain.
5. Create Reminders
While some customers will opt to pay you immediately for your goods and services, others will take some time to actually come up with a payment. This is why sending out reminders and following up with your customers is ideal with an invoice or billing system. Reminders can be quick emails, postcards, or even a friendly phone call to remind them of their upcoming payment. You can send out reminders a week or so before the actual due date.
6. Follow-Up
Following up with customers you haven’t heard from or received payment from in 30 days or more is necessary. You can send out another invoice to notify them of the balance on file, however, a phone call may be necessary after a month of no communication. As life sometimes happens, your customer may just need a little more time to repay the debt. Following up allows you to find out exactly what’s wrong and will also allow you and your customer to come up with a feasible repayment option.
While there’s a lot that goes into managing your cash flow, billing, and invoicing systems are at the top of the list. The more organized your invoicing and billing system is, the more efficient customer service you can provide – while raking in the profits necessary to fund your small business.