When you were thinking of becoming a business owner you may have spent some time daydreaming about getting paid, but it's highly doubtful you had any reveries around invoicing. Because, let's face it, invoicing is pretty dreary. Often time-consuming and fiddly, the never-ending treadmill of asking for money and gently (or eventually not so gently) reminding clients to actually pay for your products can be a huge headache.
So how can you make billing less painful?
Over on SteamFeed, business owner Gerry Michaels shares his own struggles with invoicing and offers the solutions that worked best for him.
Perpetual Billing Machine
His first billing nightmare, he confesses, was due to the fact that he started the billing cycle as soon as a client signed a contract. This meant billing took over his life, and he ended up sending out invoices and following up haphazardly throughout the month. "I was invoicing constantly and had to be sure I was sending the right invoice to the correct client, and if the client was late with the payment, the situation got worse," he writes. Does this sound familiar?
His solution was an ironclad decision to bill only on the 1st and 15th. "If I have a client that signs in between those dates, work doesn’t start until the next nearest date. If they really are anxious and have to start immediately, we just bill them immediately the percentage until that next date. That way we are invoicing only twice a month," explains Michaels.
Slow Motion Payments
When your clients need something done you don't dilly dally for weeks before helping them out, so it can be frustrating (to say the least) when clients don't pay promptly. What was Michaels solution to this common issue? He's taken a hardline that he says works well for him:
"Every invoice that goes out is labeled 'due upon receipt' no exceptions. We also place a clause in the contract and have clients initial that they have read and acknowledge the clause. That clause states 'if invoice is not reconciled in ten days of invoice date, all work on the account stops until paid in full,' and we stick to it. We have had very few problems with this issue since instituting this clause, the trick is sticking to it."
There's some evidence from an analysis by invoicing software company FreshBooks that "due upon receipt" isn't always the best way to go. "Most people seem to interpret 'upon receipt' as 'whenever you feel like it.' It's as if they receive an invoice with the words "payable upon receipt" and immediately dump it into the 'whenever' pile," claims the company. Instead, it recommends giving a specific due date and skipping accounting jargon using language like "Please send payment within 21 days of receiving this invoice."
Whichever you find works best for you, 'upon receipt' or 'please pay by,' the overall lesson may actually be the same. Find a policy, explain it clearly and forcefully to clients up front and stick to it.
Want more billing advice? Michaels post also goes into what tech tools his firm uses and which payment methods work best, so check it out in full.
What are your biggest challenges when it comes to billing?