For many small businesses, billing and receiving payments can be a bit of a nightmare. For companies with a small number of staff who would rather concentrate on developing their growing business, sending out and chasing up invoices can be a cumbersome process. Even after your invoices have landed on clients’ desks or in their email inboxes, there’s no guarantee that they’ll be paid in a timely manner. If, like many small business owners, you’d like to keep billing as stress-free as possible in order to be able to devote the most amount of time and concentration to your work, it’s important to follow some invoicing best practices.
Prioritize
The sooner that you get an invoice sent out, the more chance that you have of it being paid on time and in full. It may seem like very simple advice, but sending out invoices should be made a priority as the sooner you send them, the sooner you will get paid. As soon as you finish work on a large project you should ensure that invoicing for the job is the highest priority. Since most business owners didn’t start their business in order to do billing, it’s easy for work to pile up and slip through the cracks, leaving jobs unpaid for after long amounts of time. The most effective way to ensure that you get paid every single time and the process runs smoothly is to put invoicing right at the top of your to-do list.
Use a Numbering System
In order to make sure that you get paid on time and have an efficient invoicing process, it’s crucial that you have a well laid out system in place. A numbering system for your invoices and your customers is a simple yet great way to ensure that you keep track. Once you begin a numbering system it’s important to remain consistent. This will make things easier for you if you ever get audited, help with tax returns and help you to keep organized in general.
Think About Wording
It may seem obvious, but you’d be surprised by how many business owners don’t pay much attention to the way that they word their invoices. When you were a child you were probably taught by your parents to say please and thank you, and it turns out that this is also important when you’re running a business. Businesses who use polite language on their invoices and use the invoice as an opportunity to thank the clients for their business are more likely to enjoy faster payments than those who do not.
Go Electronic
Sending paper invoices only works to slow the whole process down. You will need to wait for the invoice to be mailed and if the client is also making the payment offline, you’ll need to wait for them to make the payment and for it to clear. Online payment options make things a lot quicker and easier for both you and your clients, as the invoice can be sent and received within a matter of seconds. Including a link on the invoice which takes the client to an online payment system can help you to receive the payment in the quickest way possible.
Send Payment Reminders
Unfortunately, a number of small business owners will send an invoice and then neglect to follow up on it, meaning that it takes longer for clients to make the payment that they owe. This can cause payment delays, as often clients will simply forget that they need to pay an invoice. Sending reminders to your clients if they are taking a while to pay is important to ensure that you receive the payment on time. Specify a deadline on your invoice and send a friendly reminder to your client if they have still not made payment when the date is close.
Offer a Discount
If you can afford to, it may be worth offering a small discount to clients who are willing to make a payment early. Even if you offer only a one or two percent discount, many clients will be happy to take advantage of the offer as even the smallest of savings can add up. By offering this promotion to clients who are willing to pay within a few days of receiving the invoice, you can increase the amount of quick payments which you receive and save time chasing clients for payments.
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