Invoice more often, get paid more often
It’s tempting to put invoicing off, but you won’t get paid without invoicing, so make it a priority. If you have a steady schedule, pick a day and time of the week to tackle your billing. If you do lots of odd jobs, send invoices as soon as the work is done. This will help prevent a backlog from forming, and will get your customers on the clock sooner. This should allow money to start flowing into your business more consistently, rather than in fits and starts. If you’re just too busy, a bookkeeper can help.
Use quote and invoice templates to their fullest potential
It’s a good idea to get quotes signed off before starting work. Use descriptions from the agreement in your invoice so customers can see they’re getting what they paid for. It should help avoid misunderstandings or invoice disputes.
When it comes to creating your invoice, many businesses use templates from spreadsheet software. This can save a lot of time if you:
- save templates (with pre-filled information) for specific types of jobs and customers
- build in formulae that total charges and add taxes for you
As you grow, you may look for specialized software that can help speed up the invoicing process by learning the price of your products and services, calculating taxes, and automatically preparing paperwork for filing daily bank reconciliations to tell you which invoices have (and haven’t) been paid.
Track time and materials better
Figuring out the time or money you’ve spent on a job can be slow work. If you need to open a diary or sift through dozens of receipts to piece everything together, then it’s probably taking too long. You need one source of truth for time, and one for expenses. Not everyone is good at staying this organized, but there are apps to help:
- Time-keeping apps allow you to clock in and out of jobs from your phone.
- Expense apps allow you to photograph a receipt and attach it to a specific job so the information is there when you go to make an invoice.
How to train your customers to pay on time and chase late payments
When you first bill a new customer, call them to check the invoice has everything they need. It’s a nice courtesy, but you’re also taking away excuses for late payment. If they miss the due date, call the very next day. You don’t have to be aggressive. You’re just making sure nothing’s wrong, and signaling that you're responsible. .
No matter how accurate, professional or well-formatted your invoice is – there is still a chance it won’t get paid on time. You have to follow up. Remind your customer when the due date is, and if they still don’t pay, get on the phone. It’s not fun, but it’s hugely important.
Consider accepting online payments
You can get paid up to 30% sooner just by offering a convenient payment method. There are many out there, including payment apps like Venmo, automated clearing houses (ACH) like PayPal, or bank transfer. It doesn’t cost anything to set any of them up, although most charge a transaction fee. If your customers already pay on time, then you’re probably ok. But if they’re slow, an easy payment option could help speed them up.
Disclaimer: Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.