As a small business owner, you wear a lot of hats, and one of those is "bookkeeper." To get paid for your hard work, you need to be good at sending and tracking invoices. A streamlined process can help you get paid faster, which is especially important during your busy times. Here are seven tips to follow:
1. Get Clear on Terms
Before you agree to take on work, make sure the client understands your prices and terms. Communicate your rates in writing, whether they're by the hour or by the project. Define payment terms, such as "due upon receipt of invoice" or "net 30 days." Outline what will happen if your client is late with payment. And make sure you know to whom the invoice should be sent. Your primary contact might not be the person who deals with the company's accounting.
2. Put Invoicing on Your Calendar
Sending and tracking invoices should be part of your workflow, and it helps to set a schedule. Being prompt with your invoice could encourage your client to be prompt with payment. Depending on your business, decide whether you are going to invoice weekly, monthly or immediately upon completion of the project. Make sure to put billing on your calendar or to-do list so you don't get busy and forget.
3. Send a Complete Invoice
When you send an invoice that has all of the proper information, you make it easier for your client to pay you. Include your contact information, details about the service or product you sold the client and an invoice number that helps both of you track the payment. Use consecutive numbers, or a mix of letters and numbers, and be consistent.
4. Consider Using Invoicing Software
While it's possible to track invoices on a spreadsheet, if you do a lot of billing, you might consider using a paid or free invoicing program, such as FreshBooks, QuickBooks, Zoho Invoice or Invoicely. Software will help streamline the process, generate professional-looking invoices and track payment status. Some programs allow you to accept online payments by PayPal or credit card, which can help you get paid faster.
5. Keep a Paper Trail
Some of your clients will prefer printed invoices. Make a note on your spreadsheet or software program of the date you mailed the invoice. Even if you provide a hard copy, always send an electronic copy. Printed invoices are easily lost in the mail or on someone's desk.
6. Send Friendly Reminders
While it may be a little uncomfortable, it's a good idea to remind clients about upcoming due dates, especially if you charge a late fee. Send a friendly email a week before payment is due, reminding them to be prompt with their remittance. Unfortunately, delayed accounts receivable is a common problem, and that can wreak havoc on your cash flow. Reminders help you get paid quicker, and most clients will appreciate the notice.
7. Follow Up on Late Payments
Unfortunately, a late payment is going to happen now and then, and that affects your cash flow. A day or two after the missed payment, send your client a polite and professional email that asks if they've sent payment. Help them track the payment by sending a copy of the invoice or including details such as the invoice number, amount due and due date. A late payment notice is part of your paper trail, and that can help should you ever need to pursue collection or legal action to recover the debt.
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