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How to Improve Customer Billing

Eight strategies to help meet your multiple billing goals simultaneously.

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Businesses need to carefully manage customer billing. Whether you shipped a batch of products or provided monthly services, you need to get paid for your efforts — which means you need to send an invoice and be ready to accept customer payments.

Unfortunately, there are a lot of ways this process can go wrong. Late payments, inconsistent records and unhappy customers are just a few of the potential consequences.

So what steps can you take to improve your customer billing process?

The goals of customer billing improvement

Let’s start by identifying the main goals of customer billing improvement. After all, “improvement” can mean different things to different people.

  • Consistent records. It’s important to keep track of who you’ve billed, which customers have paid, which ones still owe, who has late fees and other billing information. The right approach to customer billing will make it easy to keep records on your transactions — and keep those records consistent and accessible.
  • Fast payments. Most companies also want to optimize for faster payments. If your invoices are paid immediately, or at least on time, you’ll have fewer headaches chasing down customers with missed payments. More importantly, you’ll improve cash flow, get access to money faster and keep the business moving.
  • Fewer errors. Billing errors can be a nightmare, especially in a complex system with multiple dependencies. If you bill a customer for the wrong amount, or if you neglect to realize a customer has missed a payment, it can wreak havoc on the rest of your financial system. No billing system is completely foolproof, but reducing manual effort and relying on consistent processes can help significantly. 
  • Less time spent. You’ll also want to optimize your system so that your employees spend less time on it. If customer billing takes less time and runs more smoothly, your employees will be freed up to focus on more important work — and they’ll be less frustrated at the same time.
  • Customer satisfaction. Finally, don’t forget about your customer satisfaction since your customers are an integral part of the billing process as well. If your customers are unhappy with the billing process in any way, they may be less likely to work with you in the future. Conversely, if your billing system is smooth and reliable, they’ll think more highly of your brand. The best thing you can do here (in addition to improving consistency) is to reduce customer effort necessary to make payments.

The following strategies will often cover multiple goals simultaneously.

1. Survey your customers

Make an effort to survey your customers on a regular basis and ask them what they think of your billing system. How much effort does it take to receive, review and pay your invoices? How happy are they with your billing procedures? Do they have any recommendations for how you can improve? If your survey emails have a compelling subject line and your surveys are easy and quick to complete, you should have no trouble collecting the information you need to evaluate your billing from a customer’s perspective.

Once you have a Customer Effort Score (CES) in place, and a handful of other customer satisfaction metrics, you’ll be in a much better position to understand and improve the mechanics of your customer billing process. Continue following up with additional surveys to see how your customers’ attitudes change in response to your improvements.

Related: The Ins and Outs of Modern Payment Processing 

2. Invest in better billing software

One of the best things you can do is upgrade your billing software. Since your billing software serves as the central hub of your billing process, it has the potential to improve everything, from billing consistency to customer satisfaction.

Look for:

  • Total centralization in the cloud. All your invoices should be stored in the cloud for easy access. You should have immaculate and easily searchable record-keeping for all your internal needs.
  • Built-in customization tools. You should also have total control over when and how your customers are billed. You should be able to use templates or create invoice models from scratch — and you should have control over things like automated reminders and follow-ups.
  • Integrations. Ideally, your billing software will integrate with other software you’re using, such as inventory management software, to make your life easier and streamline interactions between different departments.
  • Automation. The more you can automate, the better. Automation saves time, improves consistency and boosts bottom-line results.
  • Ease of use. Your billing software also needs to be easy to use and understand. It should be intuitive for your employees and customers alike.

3. Make your invoices easy to understand

Speaking of intuitive design, it’s important to shape your invoices so they’re clear and easy to understand.

  • Make use of white space. Don’t cram too much information into a tight space. It can be overwhelming and make it difficult to see the most relevant information.
  • Ensure your text is legible. Use a font that’s easy to read and make the text big enough that it’s legible at a glance.
  • Include all necessary information. There’s a lot of information to include on an invoice, such as your company name and address, a description of services provided, the total amount due, late fees and penalties, terms, methods of payment, and of course, your customer’s information. Make sure to include all of this — and make the most important info (e.g., how to make a payment) more prominent and visible.

4. Keep your terms tight but reasonable (and penalize late payments)

Did you know that if you put terms on your invoice, you’re 1.5 times more likely to get paid on time? And if you add a due date, you’ll be eight times more likely to get paid on time? Considering 25 percent of all invoices are sent without a due date, this could make a huge difference in your billing process.

Your terms should be tight, but reasonable. Depending on the customer relationship you have, you might offer net-15 or net-30 terms, requiring your customers to pay within 15 or 30 days. Also, don’t just post the terms — make sure you include an actual due date.

What happens if this due date comes and goes with no payment? You should have some sort of penalty in place. Make it clear what the penalty for a late payment is and clarify at what point that penalty will apply. For example, you could impose a late fee of 1.5% of the invoice value each month the payment is late.

5. Allow multiple forms of payment

Give your customers multiple options for how to pay and make those options as convenient as possible. If you’re sending bills digitally (as you should), you should have options for customers to pay with a single click. Conventional payments, like credit card and check, are a given, but you might consider offering alternative forms of payment as well, like cryptocurrency.

6. Always send invoices at the same time

Keep your process consistent. Depending on the nature of your business, that may mean sending an invoice whenever products are shipped, or batching your invoices to send on the same day of each month. As long as you’re always following the same process, you’ll be in a better position.

Related: Four Top Tips to Optimize Your Online Checkout

7. Automate follow-ups and reminders (and be ready to escalate)

You probably already know it’s important to follow up with a customer who hasn’t paid an invoice by the due date. But if you rely on memory and manual processes to follow up, you’ll waste time and suffer from inconsistency.

Instead, it’s better to automate your follow-ups and reminders as much as possible, so you don’t even have to think about the process. You should also be ready to escalate gradually if you continue to get ignored.

  • Initial follow-ups. Your initial follow-ups should be light and to the point, sent a day or two after the due date; a simple “Hey! Just wanted to reach out and follow up on this invoice” works fine in most cases.
  • Stern reminders. If your first follow-ups were ignored, or if more than a week has passed, you might issue a more stern reminder that the payment is past due. This is also a good time to consider imposing late fees.
  • Personal phone calls. If you still don’t get an answer, or if several weeks pass without payment, it’s time to make a personal phone call. You can use automation to trigger an employee to take action.

8. Test the system

Your customer billing software is designed to send customers invoices automatically, then follow up three days after the due date if they haven’t paid. So it should work perfectly, right?

Hypothetically, the answer is yes, but there are many things that could go wrong, from system errors to flaws in the original human inputs for the software. That’s why it’s important to test your system long before you start to rely on it. Conduct several tests to make sure your invoices are being sent, that your customers can make payments easily and that your planned automated follow-ups are working properly.

Mastering customer billing is a time intensive process, especially if you haven’t spent much time on billing optimization in the past. But your time and effort will be well spent. A better billing process means time saved, improved cash flow, happier customers, and as a result, a business more likely to flourish.

Anna Johansson

Written By

Entrepreneur Leadership Network Contributor

Anna Johansson is a freelance writer who specializes in social media and business development.