Entrepreneurship has many romantic aspects, including setting your own hours and rates. Invoice management is not one of them.
Although not a fun part of being in business, invoice management is necessary. Keeping track of your invoices shows you the work you’ve performed and how much you’re owed. It also helps you keep tabs on who’s paid and who hasn’t.
Managing invoices is no easy task. It takes planning and coordination. But when done effectively, you’ll never be unsure of what you’ve done or how much you should have.
We’ve listed 10 steps to effectively managing your invoices below.
10 Steps to Effective Invoice Management
Invoice management isn’t as easy as throwing all of your invoices into one pile. You must establish a system of organization and double-checks. If you don’t, some of your clients could be stiffing you without your knowledge.
1. Payment Reminders
An automated payment system is an excellent investment for any entrepreneur.
Automated payment systems allow you to set reminders of payment for your clients. The reminders include how much they need to pay you as well as the payment due date.
You’ll be notified of a client’s failure to pay. That way, you can contact the client and address the situation.
There are several ways that an entrepreneur can be paid. Common ways include by hour and by project. If you require payment by project, many systems allow you to send a request to the client for project approval.
The most convenient aspect of automatic payment systems is not having to keep checking for payment. Normally, you don’t have to contact clients unless they haven’t paid you. With one of these systems, you’ll be sure the only reason you have to contact a client is for payment.
2. Invoice Numbering
All transactions should have a unique number attached to them. That number allows both you and the client to reference the transaction. All invoices should have the corresponding transaction number printed or written somewhere on them.
Furthermore, you should have a system for keeping track of all numbers. Many business owners use software or an online tool. Even basic programs such as Microsoft Excel and Google Sheets can do the job.
Old-fashioned entrepreneurs might not be comfortable with relying on computers to keep records. In this case, a record book or filing drawer can satisfactorily substitute.
If you stick to written records, be sure your invoice numbers are arranged in some kind of order. An easy solution is to combine the date and number of the job.
For example, let’s say you do two jobs on December 20, 2017. The first job would be 2017122001 and the second job would be 2017122002.
3. A Simple Payment Process
A simple payment process can make all the difference in how effective an invoice management system is.
The most convenient payment system is one where both you and the client can view the client’s invoices. Ideally, this system would allow both of you to edit information, especially payment information.
If such a system is not available, the next best thing is an e-mail receipt. E-mail receipts are sent directly to a client’s e-mail address. E-mails can also be set to send you a notice once they have been viewed.
This kind of system also typically updates you as soon as you receive payment.
An honest day’s work merits an honest day’s wage.
Some clients don’t see it that way, though. And some struggle with their own expenses.
Regardless of the situation, you need to be paid for the work you’ve done. And you should be paid on time.
The best way to ensure you’re paid on time is to set up a penalty system. Include a statement on your invoices that you will charge a penalty fee if the invoice is not paid on time.
It wouldn’t hurt if that penalty also increased over time.
Stiffed invoices are a bane of entrepreneurs. For this reason, it’s also a good idea to make all clients sign a contract promising payment by a certain date. That way, you can take that client to court if you don’t get paid.
5. Automated Invoices
Running a business is tough work. It’s hard to keep up with invoicing, especially if you’re a one-person business.
Thankfully, automated invoicing exists.
In your invoicing system, simply select the timeframe for which you want to bill and hit “print” or “send.” Depending on which you choose, all of your invoices for that timeframe will print for mailing or be sent to clients via e-mail.
6. Timely Billing
Regardless of whether or not your invoices are automated, they need to be sent out on time.
Sending your invoices out on time helps you keep track of who has received their invoice and who hasn’t. In turn, timely billing helps you determine who still needs to pay.
Timely billing goes beyond efficient invoice management. It makes you look professional and reliable. It is important to always maintain that impression for clients.
7. Template Customization
Invoices with mismatched templates are hard to read. The information is jumbled together, and often the due date doesn’t stand out.
You can remedy this with an invoice management system that allows template customization. Template customization allows you to move elements on your invoices. It also lets you remove elements altogether.
That way, only relevant information will be displayed, and it will be easily readable.
If template customization isn’t available, there is another option. You can use a colored highlighter to mark the important areas of your invoices.
8. Time Tracking
Keeping track of your time is important. If you bill by the hour, your time determines your wage. If you bill by the project, you can see how much time you’re investing in a particular project.
Time tracking is also important for clients. It lets them see how much effort you’re putting into your work for them.
9. Short Due Dates
Part of ensuring you get paid on time is short due dates.
Don’t give a client more than a couple of months to pay up. In a couple of months, that client could have moved on to a different area. That leaves you with an unpaid invoice for hundreds, maybe thousands of dollars.
If possible, set the due date for a few weeks rather than a few months.
Short due dates also let you determine which clients are reliable for timely payment. Unreliable clients can be weeded out and refused future work.
10. Professional Language
It goes without saying that you should always use professional language when dealing with a client.
It can be difficult to maintain a professional face with a client who hasn’t paid up, though.
When dealing with these clients, always use “please” and “thank you.” In other words, “Please pay this bill by this date” and “Thank you for your business!”
Including such language on your invoices shows your professionalism and appreciation for your clients’ business.
Find Out More About Invoice Management!
Billdu is a full invoice management system designed for your convenience and your clients’ convenience in mind. Our system includes payment reminders, recurring invoices, and other must-have features to keep you on top of your invoices.
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