Tips and Tricks for Creating a Killer Invoicing Strategy
It’s a basic rule of business: You need to send out invoices in order to get paid. But invoicing isn’t exactly a fun and glamorous task, no matter how important it is. Many business owners procrastinate or only send invoices every once in a while, and it can really hurt your bottom line.
Establishing an invoicing strategy is a good way to make sure you send professional invoices on a regular basis, and get paid. Here are some tips from Credibly to help you get started.
Get Customer Information Up Front
At the start of a project, engagement or work order, collect the information you’ll need later to invoice the client. This information may include:
- The name and contact information for the person who should receive the invoice.
- The amount and timing of payments. This will tell you how often to send invoices, and for how much. For example, you may be paid a certain amount when you start a project and the rest when you reach certain milestones. Or you may be paid every month, on an hourly basis. Or you may just be paid when the work is complete or the item is delivered.
- Any account or reference number that your customer uses to identify you, your order or your project.
- Any special invoicing requirements, such as the format or additional details to include.
When you collect this information up front, it will be easier to create payment-ready invoices when the time comes.
Keep Records of Your Work
Good record-keeping is the foundation of good invoicing. There’s nothing worse than wrapping up a big hourly project and realizing you have no idea how many hours you actually worked. For hourly projects, use an online time-tracking tool or simply keep track of your hours in a paper planner. Be sure to make notes about what you did during that time, in case your hours are ever questioned.
For fixed-rate work or sales, track your customers and completion dates using software or a spreadsheet. Depending on the type of business you have, you may need additional documents like contracts, terms and conditions or a bill of sale.
Here’s an article that goes into detail of the dangers of poor record keeping, and what you can do to avoid them.
Send Invoices Promptly and Regularly
It’s easy to procrastinate when it comes to invoicing, which can be dangerous. Entire projects can fall through the cracks, meaning you never get paid for the work you did or the items you sold. Plus, customers tend to be happiest and most willing to pay when the work you’ve done is fresh in their minds.
To avoid procrastination, establish some invoicing rules and follow them religiously. Here are a few basic ones you can start with:
- If you bill every month for hourly work, send invoices at the same time every month.
- If you work on projects, send an invoice as soon as the work is delivered, or when payment is due according to your contract.
- If you sell goods, deliver the invoice along with the product.
Make Your Invoices Professional and Complete
Invoicing is not the moment to show off your creativity. The point is to get paid, and that’s most likely to happen if your invoice looks professional, is easy to understand, has all the necessary information and looks the way your customers expect an invoice to look.
If you’re new to invoicing, that can sound like a lot to wrap your mind around. But online invoice templates can create professional invoices in a snap with the information you provide. A great example of an online template you can use is PayPal’s online invoice generator.
Keep Track and Follow Up
If you don’t send many invoices, you can track them with a simple spreadsheet. But if you have a high volume of transactions, accounting and invoicing software may better meet your needs. Always make note of the date the invoice was sent, the amount, the due date and when it was paid.
When an invoice isn’t paid on time, you can simply send a second invoice, or you can follow up with a friendly email or phone call. Remember, your goal is to get paid, and your chances are usually better if you start with a calm and cooperative approach.
Creating and following a good invoicing strategy is just good business. By sending complete and regular invoices, you increase the chance that you’ll get paid in full and on time.