Finance

Business Invoicing Best Practices

Get Work Billed With Maximum Efficiency and Minimum Hassle

Plenty of businesses see invoicing as a time-consuming distraction. But getting work billed and money in is fundamental to survival. 

“I must sit down and do my invoices this weekend.” How many times have you heard a small business owner come out with a phrase like that, usually accompanied by a heavy sigh? If you are self employed or run a small business yourself, the chances are you’ve said or thought the same thing from time to time.

If you see invoicing as a boring task that is only marginally above a root canal in the list of fun ways to spend your time, then one firm of Peterborough accountants can reassure you that you are not alone. Small business owners and entrepreneurs would prefer to be out there building the business, working on the strategy and winning new customers. But of course, everyone knows deep down that if the invoicing is not performed effectively, there could soon be no business at all.

Payment terms are fundamental

It’s well and good taking an idealistic approach and saying that if you deliver great products or services the money will take care of itself. The truth simply does not bear that out. The number one reason for a business to go under is because it runs out of cash, and frustratingly, that can often happen to an operation with a full order book and a host of happy customers.

Guarding against cash flow problems needs to be top of the risk management agenda, and that means getting paid on time. Part of that is to include firm but fair payment terms in the contractual terms and conditions. But when these prescribe payment within X days, the clock does not even start running till you have issued the invoice.

Make invoicing part of the process

A uniform rule for businesses big and small is that if there is a routine or an established process for a task, then it will be more likely to be performed correctly than if it is left to chance. Think about something less fundamental than invoicing and you can see the sense of that. For example, if every completed job is always accompanied by an invitation to complete a satisfaction survey, then that’s one thing. If instead you have a policy of “sometimes asking people to fill out the survey when you remember to do so” you just know it is not going to happen.

Have a procedure for invoicing, whether it is always sending the invoice before closing out the task, or perhaps sending all invoices every Wednesday afternoon. Whichever you choose, the point is to create a rule then follow it.

Keeping track

Sending invoices is one thing, but you need to know how much you have invoiced, to whom and when for a whole variety of reasons, including performance monitoring, financial reporting and not least, chasing up late payers.

For a small operation with a handful of clients, you can get away with using a basic spreadsheet for this, but there is better technology available, so why not take advantage of it? A cloud-based invoicing system will have all the information collated when you need it, and will automatically let you know when an invoice is due or a payment needs chasing.

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