Whether you're a freelancer or small business owner, invoicing is a crucial component of your business if you want to maintain a positive cash flow. The problem is that invoicing isn't always so straightforward. In some circumstances it is straightforward and makes sense, such as sending a customer 10 shirts for $15 a shirt and then billing them for $150.
But what about the not-so-clear invoices where you have to describe the work involved for the client. This scenario can become problematic since it can lead to misunderstandings, questions and confusion, which can ultimately delay the payment.
I've been in the invoicing game a while. Our company has sent over 1 million invoices to date. We know what it takes to get paid. To avoid the most common delays, here are seven ways that you can bill your customers without getting overly technical.
1. Agree on terms before you start.
Before you start working with a client or selling them products, you should both agree on a set of terms. These terms should clearly state;
- Your fee, any additional fees, and when the product is to be completed.
- The percentage you require as a down payment.
- The types of payments you accept.
- A timeframe in which the client is expected to pay the invoice.
- The penalties charged to the client if the bill is past-due.
- How payments will be accepted, such as through a third party site like PayPal.
When describing your terms make sure that it's not ambiguous or difficult to understand because you used industry jargon. Be as descriptive as you can but state the facts simply. Make sure the terms are easy-to-understand for your customer.
2. Use the right language in your invoice.
Speaking of using the right language, your terms aren't the only written content that should avoid using jargon that rarely contains anything but industry specific terms. The actual invoice can also include confusing language. For example, if the invoice includes the "Net 30," the customer may not realize that that term means that the bill is due within 30 days of the date listed on the invoice.
Instead of using "Net 30" use plain English terms like "30 days." Or, if you really want to be clear on the due date, simply state the exact date that the bill is due.
3. Move away from excel and towards cloud-based tools.
If you're still relying on paper - or Excel-based systems to track and bill your clients then you should really switch to an online solution. At this point there is no excuse for not having a cloud-based system in place that can track and send out invoices promptly. Many of them are free. Not only does this speed up the billing process, it also prevents any manual errors from team members.
Now days there are 100+ free tools for invoicing that will make it easier to keep track, invoice and get paid in a quick way.
4. Create invoices that are clear and easy-to-understand.
Staying away from billing jargon is a start. But you can also confuse customers by including industry jargon in your invoices. Let's say that you're a coder and you billed your client for working on SQL. Unless you know that the individual paying you is familiar with this abbreviation, they're probably not going to understand what exactly it is that you're billing them for. In this case, you should include a description in plain English of the work that you performed for the client.
While this may take some extra time to create invoices, you should itemize your invoices so that they specify what's being charged in the invoice. So instead of writing 'Built website,' have a more detailed description like 'Built 5 Web-pages of HTML Design for Product Pages.'
5. Make paying you easy.
Did you know that you are 30% more likely to get paid if you have an online payment option available on your invoice? In our research of over 300k invoices, we found that you have a 30% greater chance to get paid if you allow customers to pay you online. Not only is accepting payments online fast and convenient, it also takes the confusion out of who to write a check to and where to send it. That's one of the reasons why PayPal took-off. You send someone an invoice and then they pay you with just one-click of a button - as long as they have a PayPal account.
As peer-to-peer payments continue to rise in popularity, the convenience of paying someone for goods or services will become more efficient as you'll be able to send or receive payments through email or a phone number. It doesn't get an easier than that, does it?
6. Share up-to-date data.
If industry jargon can get confusing, just think how a client feels when you hand them a report full of numbers and letters that mean absolutely nothing to them. Thanks to intuitive data software, you can now easily share data with your clients that they'll have no problem understanding since the data can be converted into something visual, like a graph.
Not only does this make data, such as billable hours, clearer to understand, cloud-based software that tracks and reports this data can be shared in real-time.
7. Automate your billing.
Think of subscription-based services like an online publication or a company sending your a product each month. You pay a certain amount of money each month and in return you'll receive a set amount of goods or services.
We'll use Dollar Shave Club as an example. You pay $9/month for four cartridges of, 'The Executive' blade - there's free shipping as well. That's incredibly easy to understand.
You can take the same idea and use it for your recurring customers. Whether it's weekly, bi-weekly, or monthly, use a software that will automatically bill your customers for an agreed upon amount of money. This saves you time, keeps the cash flowing, and ensures your customers that you'll deliver the agreed upon amount of work on-time.
Whatever service you have decided to use, do your homework make determine to use an online site, and make your service auto-billing, and auto-payments.