According to the Business Insider, 82% of businesses fail do so due to the poor management of their cash flow systems, In most cases, such failures stem from having an improper invoicing system. Without an effective system in place to manage invoices, these businesses tend to lose cash which they cannot track, and often fail to get paid on time (or sometimes at all).
How often do you forget to track an invoice or actually lose the necessary details for invoicing? A smart invoicing system has a central role to play if you ’re aiming to shorten the time between project completion and the actual payment. Additionally, such systems help improve customer relations as both the service provider and the customer fulfill their end of the bargain in due time.
Here are four effective ways to improve and simplify your invoicing process:
Replace Paper-Based Systems
Gone are the days when paper used to run the invoicing scene. By using such a system, companies could lose invoices easily and the process of creating them was time-consuming and inefficient. If your company still relies on such a relic of a system for invoicing, switching to a cloud-based invoicing software will smoothen the processes and save you both time and money.
According to Reep.com, by using cashflow management software, you can send invoices in professionally designed emails in time to increase the chances of timely payments. These systems also come with additional h benefits like invoice tracking, sending reminders and even setting up recurring invoices and automating payments. For a more convenient approach, you can further include multiple payment options such as through credit cards, a bank, or third party sites like PayPal.
Have an Agreement from the Start
Both you and the client should be on the same page about the payment terms of the project prior to beginning it. Otherwise, it can be quite damaging to your reputation for you to argue with clients about simple technicalities such as your hourly rate and the project length. With a well-described payment agreement, you can get to protect your interests and those of your clients.
Ensure that you inform the clients about the key details like your hourly rate, the project length, deposit amount, expected payment date and the penalties for missing the payment date. When clients have all this information with them, it reduces the chances of them asking questions which delay the payments. While it will take some time to craft the perfect template for your agreements, the initial effort is definitely worth the benefits.
Make the Invoices Easy To Understand
If your invoice is too vague or confusing the payment of your invoices might be delayed by clients having to ask questions.. Clients need to be able to follow each and every point of your invoice with ease. When designing them, use a clear and simple design with detailed descriptions to help the client understand what is expected of them.
For example, listing the ten articles a customer purchased individually instead of just referring to them as ’10 articles’ in their invoice provides a clear outline to the client. Also, add a number to every invoice you send out to not only add a touch of professionalism to your business but also make tracking the invoices easy for both parties.
It is every business’ dream to be paid promptly after every project is completed. However, since clients might have strict timelines for offsetting invoices, you too need to set consistent times for invoicing. Furthermore, it is tough to track daily invoices to differentiate between the paid and unpaid.
Choose a timeline for sending invoices that is satisfactory for both you and the client, be it after a week, a fortnight or a month. It is also wise to remember that the longer the invoicing period is, the longer it might take to get paid. In case a client takes too long, send a follow-up email.
Cash flows mean everything to the health of your business. As long as your invoices yield a healthy cash flow, then you can build a sustainable business. Revolutionize you invoicing tactics to build a healthy relationship with your clients.