Unfortunately, many businesses struggle with billing. Even when you send out invoices in a timely fashion, there will always be late payments and delinquent accounts. This should be addressed as soon as possible to prevent it from impacting your operations.
Here are 7 useful ways you can improve your billing process and get paid faster.
1. Send reminders (and follow up with late notices)
It's an unfortunate but undeniable fact that paying you on time won't always be at the top of your customers' lists of priorities. When they have their own goals and concerns to think about, it's unlikely they'll put other financial commitments on the back burner to make sure your invoice is fulfilled promptly.
One of the ways to reduce the risk of clients forgetting about what they owe you is by sending timely payment reminders, being sure to include key details such as:
- The relevant invoice number and due date
- Payment terms
- Ways to pay
For initial reminders, keep the tone friendly but professional, acknowledging that the customer may have forgotten about the payment or been distracted by other demands. If your reminders don't work, be ready to send a late payment notice that adopts a stronger tone and explains the next steps you'll take if the client fails to pay within a given timeframe.
2. Gather feedback about invoice design
Invoice design might not be your first consideration when you're working to improve your billing process, but it's a factor that shouldn't be overlooked.
A well-structured and visually appealing invoice can create a range of benefits for your business, including a more professional image and a stronger brand identity. Furthermore, clients are more likely to pay promptly if they can easily see what they owe and the quickest ways for them to make the payment.
If you're looking for some direction to help improve your invoice design, engage with your customers to find out what they think works well in your current system and what changes they would like to see. This will help you build a smoother and more efficient billing process, raising the likelihood of customers paying what they owe on time.
3. Establish clear payment terms
Ideally, you should explain the policies and payment terms to your clients before making a deal. This ensures that they know what to expect with the product or service, as well as, their financial obligation. Establishing the payment terms early helps you get paid on time.
Ask your clients if they are amenable to the payment terms and method. Know if they have other preferred payment options and see if you can meet on an equally comfortable arrangement. You should also inform them of the consequences of late payments.
4. Automate your processes
One of the best ways to improve billing is through automation. Using spreadsheets can help ensure an efficient monitoring system. However, as your business grows, the amount of information you manage can grow unwieldy too. Continued use of spreadsheet may increase the chances of error and inaccuracies.
Enterprise billing software can be a powerful tool providing a variety of features, such as sending electronic invoices, managing billable hours, sending reminders and follow-ups, and eliminating manual data entry. All of these functionalities make billing streamlined and a lot easier.
5. Invoice consistently
Stick to the agreed billing schedule. Not only does this help you plan ahead, but consistency allows your clients to prepare. It’s also recommended that you send invoices on the same days of the month. For example, sending it a day before the client’s payday to remind them of their dues and to set aside cash.
6. Create clear and detailed invoices
Make your billing statement clear and easy to understand. It should list out the client’s name, services or products availed, number of items, final cost, payment terms, and other necessary details like applicable taxes and discount. If your invoice is understandable, your clients won’t have any questions and you can get paid faster.
7. Integrate your billing software
Choose a billing software that can be integrated into the other programs your business uses avoids unnecessary delays and errors. It should also help reduce workload, allowing your employees to do more.
Some systems that can be integrated with your billing software include payment gateways, accounting programs, and project management tools. By unifying all your processes and data sets, you can have quick access to the information you need to gain deeper insight about how you and the business can make better decisions.