12 Invoicing Techniques of Pros That Most Business Owners Ignore 'Don't wait to get paid.'
This story originally appeared on Due
Are you new to invoicing? If so, it may at first appear tedious and complicated. But, you can still master the art of invoicing by the following 12 techniques of invoicing pros that most business owners ignore.
1. Familiarize yourself with the basics.
Regardless of whether you outsource your bills or decide to handle invoicing on your own, every invoicing pro has taken the time to educate themselves on invoicing basics so that they can get paid on-time.
For starters, they know that every invoice should include:
- A professional headers that includes both and your clients contact information.
- Invoice number and due date.
- Itemized breakdown of services.
- Your terms and conditions, such as your return policy and late fees.
- How you preferred to get paid.
Additionally, they know how to generate customized invoices using invoicing software like Due and when to send an invoice on a predictable time. This could be either your pay cycle, like the every week, or your client's pay cycle, like the first of every month.
2. Don't wait to get paid.
The longer that you wait to send an invoice, the longer it's going to take to get money into your bank account. And, that's not good for your cash flow. In fact, we've found that if you haven't been paid within 90 days, only 18 percent of those invoices will get paid.
As mentioned above, determine the best times to send your invoices. Ask your clients when their pay schedule is or establish your own pay cycle that fits your needs. For example, if a bulk of your expenses are due on the 20th of every month, then you need to make sure that you have all of your invoices sent and paid before that due date.
If you are uncertain, at least set aside the time each week to invoice your clients or invoice your client immediately following the completion of a project.
3. Use invoicing software.
Creating paper based invoices is an antiquated practice. Even using a word processor is now outdated. Instead, invoicing pros use invoicing software that can quickly create and send electronic invoices.
These software also comes with features like the ability to set-up recurring payments and sending automatic payment reminders.
When selecting an invoicing platform ask questions like:
- What features does your business specifically need?
- Does the platform work for your business?
- How much are you willing to pay?
- How many employees and clients does the platform accommodate?
- Is it user friendly?
- Is it compatible with multiple languages, currencies, and payment gateways?
- Does it automatically backup your data?
- What security measures are in-place?
- Is there 24/7 support?
- Is it scalable?
- What do the reviews say?
4. Capture all of your work.
Is your income based on billable hours or completed tasks and projects? If so, then you'll need an invoicing system that is capable of capturing and tracking these elements. The reason? It ensures that you'll get compensated for the hard work that you just completed.
A time tracking tool, for example, will accurately capture the billable hours that you spent on a particular task or project so that your clients won't feel like you're overcharging them.
5. Brand your invoices.
Including a logo on your invoices is one of the most effective ways to speed up payments. It makes your invoice stand out from others and displays professionalism.
Besides your logo, incorporate your brand's colors and find a template that matches your brand. For example, if you're a graphic designer, you should create your own template that showcases your skills, as opposed to a generic and bland PayPal invoice.
6. Know relevant invoicing terms.
An invoice is only as good as the payment terms and conditions that you include on your invoice, which is why you need to become acquainted with invoicing terms like:
- Terms of sale that cover cost, amount, delivery, payment method, and when the payment is expected.
- Payment in advance, such as a 50 percent down payment.
- Immediate payment, which means that a payment is expected when a product or service is delivered.
- Net 7, 10, 30, 60 or 80. Use "days" instead of "net." Remember, to keep your terms short, such as "Please make payment within 10 days."
- 2/10 Net 30, which translates to "Please pay within 10 days and save 2 percent."
- Line of credit where the client has the opportunity to pay the invoice over a period of time.
- Quotes and estimates are used when a client is comparing prices.
- Recurring invoices are used for ongoing services so that you can expect to automatically be paid on the same date each month.
- An interest invoice is the invoice, along with the interest charges that have accumulated due to late payments.
- Invoice factoring is when you sell an unpaid invoice to a factoring company.
7. Invoice the right person.
One of the most common mistakes that I've seen invoicing newbies make is assuming that their contact is the same person responsible for handling payments. That may be the situation if you're working with a small business, but chances are that your client has someone else managing their bills.
To speed up the payment process, find out the individual who is in charge of paying you invoice so that you can email the bill directly to them.
8. Review your contract.
If you lived in a perfect world business would be conducted with a handshake. Unfortunately, that's the case. A written contract, which outlines the scope of the project and how and when you'll be compensated, protects you and your client. If your client doesn't propose a contract, make sure that you do.
Prior to sending any invoice, quickly review the contract to make sure that everything lines-up. For example, if the contract stated that payment will only be made via check, but the invoice says that payment is to be made through PayPal, then you need to change the payment method so that there isn't any confusion.
9. Assign invoice numbers systematically.
When a client hasn't made a payment on-time, it's much easier for them and you to track that invoice when you refer to "invoice #7061," instead "That invoice I sent sometime last month."
When assigning numbers to your invoices, make sure that it's systematically, consistently, and chronologically. For example, you could numbe your invoices by year. In this case, 2017052 would be the 52nd invoice you sent in 2017.
Others use a code for the project or client. For example, DUE09 would be the 9th invoice for Due.
10. Automate the follow-up.
Chasing down late payments is never fun. But, it's also time-consuming. Instead of wasting your workday sending emails and phone calls, select an invoicing platform that sends automated late payment reminders for you.
Beyond late payment reminders, most invoicing solutions will also remind clients of upcoming due dates and offer an incentive like a 2 percent early payment discount automatically for you so that the bill is paid before the due date.
11. Keep copies.
While invoicing software is a necessity, you shouldn't solely rely on this software to create and store your records. Make sure that you store all of your invoices on the Cloud or on your computer's local storage just in case technology fails. Instead of completely losing the invoice, it can be easily retrieved.
12. Thank them, and ask them to thank you too.
Being polite by saying "please" and "thank you" can increase the percentage of invoices being paid on-time. Furthermore, it shows your clients that you appreciate their business.
Besides being polite, show your gratitude by throwing them a little extra work, giving them a discount, asking them for feedback, or sharing with them a link to an article that the client could use to solve a pain point.
And, don't forget to ask them for a testimonial. By asking them "How did I do," you can make improvements in your business.
And, as an added bonus, you know have a testimonial that you can proudly display on your website.
(By Deanna Rampton)