There’s so much to learn and do when you run your own business. And it’s great when you start feeling comfortable with your tasks and know you’re adding genuine value to the industry and customers you call your own. However, you don’t want to make too many rookie mistakes when it comes to billing for your time and invoicing correctly. After all, if you own a professional services business, your time is money.
Losing out financially when you’re trying to get ahead can be heartbreaking. So here are seven tips for small businesses to follow so you don’t have to learn the hard way when it comes to your finances.
1. Set your terms
You are entitled to set invoice payment terms that suit you. It’s no longer a given that you should have to wait 30 days for a payment or wait until the 20th of the month. Instead, outlining a 7-day payment term is perfectly reasonable.
Be very explicit with your clients about your terms, both when you provide them with a project pitch, and when you send your invoice. State your expectations around due dates, late fees, how payments should be made, and what will happen if payment deadlines aren’t met.
You can also ask for a deposit or split payments throughout the life of the project. You might want to bill this way for high-value projects so you get a financial commitment from your client to meet their side of the deal.
2. Chase overdue invoices
Let go of feeling awkward about asking for money. In many cases, you’ll find that when you follow up on unpaid invoices, the client has simply forgotten to pay, misplaced the invoice, or never received it in the first place. There’s often no malicious intent behind missing the payment, in fact, it’s the client that usually feels awkward!
Send an automatic reminder to late payees (which is easy if you use project management and invoicing software like WorkflowMax by BlueRock), but also pick up the phone. It’s easier to have a direct discussion with a client rather than to-ing and fro-ing over email.
If you don’t have your own accounts team to follow up on late payments, consider enlisting an accountant or bookkeeper who can help you with this task. Online invoicing with Xero lets you set automatic reminders or you could use an app like Satago for debtor tracking. If you need to escalate things, talk to a debt collector – but don’t leave it too long.
3. Invoice at the end of a project
Don’t wait until the end of the month to create invoices. Send them when you complete a project instead. WorkflowMax by BlueRock has comprehensive online invoicing for small businesses that lets you control and customise what you include on each one. And with cloud accounting software like Xero, you can even send your invoicing straight from a job site as soon as you’re done. This is better for your cash flow, and likely your client’s too.
As a side note, when you finish a project, it’s a great time to ask a client for a testimonial while the job is still fresh in their mind.
4. Make it easy for yourself
If you’ve got a business that needs to track and bill by time, WorkflowMax by BlueRock makes producing quotes, tracking your time and creating invoices a breeze with one streamlined system.
5. Have records to back up your invoice
One of the key benefits of using job management software to track your time is that you’ll always have an accurate record of the work you’ve completed. Whether you send a breakdown of your time to your clients or not, you’ll feel confident that you have information to call on should a client question your invoice.
6. Get the correct details from the start
During your client onboarding process, be sure you get as much information as possible about the person, department and address that needs to be included on your invoice (WorkflowMax by BlueRock’s client management feature lets you record and retain all your client information in one place).
Emailing invoices directly to the person in charge of accounts reduces the likelihood that your bill will get overlooked or put on someone else’s ‘to do’ list. Check whether your client wants you to include a purchase order or project codes on your invoice, and what level of breakdown they require.
For regular clients, it can help to develop a relationship with their accounts department, so you can contact them directly with any queries you may have.
7. Make it as easy as possible to get paid
This might sound obvious, but check that your payment methods, including your correct bank account details, are clearly stated. If you use Xero and WorkflowMax by BlueRock (a match made in heaven!), you can set up an online payment option so your client can pay by credit card or direct debit.
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Getting paid is supposed to be the fun part about running your own business. So don’t let small business invoicing stress you out. Follow these seven tips to help make sure that making money is a simple and smooth process.
