Are you wondering which is the best invoicing software for contractors? Why choose software to perform this basic accounting task when you’ve been doing manual invoices since day one of your business? What exactly can invoice software do for your business as a contractor?
Figuring out if moving your invoices online is a smart move for your business or not can be a headache you don’t want to deal with right now. But, your accountant is advising you to make the move and you’ve heard other contractors raving about simpler invoicing processes. Is this the time to move your paperwork online?
Let’s talk about invoicing software and how it can be the smartest move you can make for your own construction or home-improvement business.
The Role of the Contractor
When starting up as a contractor and running your own business, you’ll discover there are many roles performed by yourself. While large-scale businesses may have a team working for them and taking responsibility for various tasks, your start-up may require you to perform most jobs. And, this includes paperwork.
Your role as a contractor requires to oversee the project or construction site. You need to deal with traders and vendors directly, ensuring that all supplies are provided properly and on time. Depending on the size and type of project you’re working on, you’ll need to review numerous documents and make assessments to ensure the project runs smoothly at all times.
The contractor is also responsible for submitting price bids, estimates, quotes, and fixed-price contracts. These proposals include what equipment you need, supplies and materials to complete the job, and labor costs. You’ll also need to submit an estimated number of hours it will take for the project to be completed.
From the start of the project to the end, the contractor becomes the point of all communications, managing all workers on site, and ensuring that all work stays on track. Contractors, most times, are also responsible for monitoring the cash flow of the business.
How Do General Contractors Get Paid?
Contractors are found in a wide range of industries, managing large construction sites for major firms to operating a startup for smaller home improvement projects. If you’re a general contractor, you’ll enter into a prime contract with the client. Your role, as the prime contractor, is to oversee and coordinate the whole project.
Running your own business as a general contractor often entails hiring subcontractors to perform certain jobs on-site such as plumbing, electrical work, and carpentry. While overseeing the construction or project site, you’re also responsible for the health and safety of all the workers.
Cash flow is essential to keep your business afloat and the project on track. And, this is when a general contractor asks how do I get paid? Getting paid depends on the type of project you’re running and what parties are involved. Your place in the payment chain affects how and when you get paid.
However, in most cases, if you’re a small-scale general contractor who has signed a prime contract, your first priority is making sure you get paid. Thereafter, you’re responsible for paying everyone else in the payment chain such as your subcontractors and suppliers.
Managing the payment chain can become challenging and this is when issuing invoices to the right people and ensuring you get paid on time adds more administration to your workload. If you don’t have a strong and well-established accounting system in place, you run the risk of payments spiraling out of control, leaving you to sort out the mess!
Running a successful construction or home improvement business requires you, as the general contractor, to follow certain work practices. Following these practices also optimizes your chances of getting paid on time and having a steady cash flow to run the project with minimal hiccups.
1. Secure a Strong Contract
Securing a strong contract protects both you and your client. The contract clearly outlines the specifics of the project and its outcome. A solid contract should include the following:
- The purpose of the project: All details such as the overview of the project, location, details of the property owners, and timeline should be stated.
- Description of the project: The name of the project and all steps are described.
- Estimated costs: A breakdown of all costs and the agreed-upon costs need to be indicated in full detail.
- Payment breakdown: A schedule for all payments must be clearly indicated and agreed upon with project milestones.
- Equipment and materials: A list of all equipment and materials must be included together with who is responsible for paying for them.
- Other: Any possible add-ons or extensions to the project should be stated and agreed upon by all parties in the contract. A warranty may also be included and should be determined by local construction industry standards.
2. Optimize Payment Terms
Use the contract as an opportunity to optimize your payment terms. Stipulate how and when invoices will be sent and what payment methods you’ll accept. Make it easy for your clients to pay you on time by offering a convenient payment method. With new clients, make upfront payments higher so your cash flow at the start of the project is stronger.
Indicate payment terms and what the deadlines will be. Always include late payment fees in the contract. These penalties can be agreed upon between your client and yourself when drawing up the contract. While this may not fully guarantee you timely payments, you’re legally allowed to make claims for late payment fees if it’s been clearly stated in your contract.
3. Send Invoices on Time
It’s quite simple. If you don’t send invoices, you’re not going to get paid. And, if your invoice sending is shoddy and haphazard, you can’t expect your client to be timely with their payments. Simple but clear invoices indicate to the client what needs to be paid and when.
There should be no confusion in the invoice details and how payment can be made. One of the main reasons for delayed payments on invoices is the lack of appropriate details. Invoices can be sent by email, given by hand, or mailed using a courier company. Issuing manual invoicing is a time-consuming process so automating the process will improve your invoice system.
4. Use Lien Waivers for Prompt Payments
Lien waivers are no strangers to the construction industry and are often used to ensure payments are made during and after the project is implemented. A legal document, the lien waiver generally states that the contractor waivers their right to file a mechanic’s lien against the property when the amount stated in the lien is paid.
While using lien waivers can ensure prompt payments, you’ll need to follow stringent procedures and documentation stipulated by your local state laws. You’ll also need to issue a preliminary notice when securing your lien rights.
Invoicing Software for Contractors: What Are the Benefits?
Paperwork is one of the most time-consuming tasks for a general contractor. And, if not done systematically, will end up piling up on your desk. Very quickly, your business will begin to suffer as cash flow dwindles and serious delays in the payment chain builds up.
Issuing invoices is one of the most basic and yet essential administrative tasks that needs to be done regularly to ensure prompt payment. If you’re still issuing manual invoices, you already know how much time you’re spending on this task. This is why exploring automating your invoicing system is vital if you want to keep on top of your game in the construction industry.
But, what are the real benefits of using invoicing software work for contractors in your own business?
1. Professional Invoices
The invoice software allows you to create professional invoices, simply and efficiently. You can bill your clients by including all the necessary details in their invoice, minimizing any risk of confusion. You can select from a range of invoice templates and have the option of including the following information:
- Your business contact details and logo
- Your customer’s contact details
- Billable details such as hours logged, equipment and materials used, and labor costs
- Payment methods and terms
- Amounts payable including any applicable tax amount
Clients will be impressed by a professional invoice and will be more inclined to pay promptly when they know what they’re paying for and to whom.
2. Faster Payments
Automated invoices can be sent out timeously, prompting faster payment. And, you don’t need to waste time on recurring invoices either. With a few clicks, the software handles that side of things for you! Online invoices can be emailed directly to your client’s inbox and you’ll get notification when the invoice has been opened.
You can even go one step further and include a “pay button” to the invoice. This allows your client to pay easily by clicking the feature and making a prompt payment. By improving your client’s experience whenever they receive one of your professional invoices, you’re increasing your credibility as a general contractor in the field.
3. Improved Financial Reporting and Cash Flow Management
Invoicing software is designed to make your invoice process simple while keeping your financial records orderly. Whenever you issue an online invoice, you’ll be able to allocate an invoice number to it. This makes for better filing and easier for both you and your accountant to keep track of invoices being issued.
It’s easier to know when invoices have not been paid, giving you the option to chase up payments immediately without any delays. We all know how hard it is to get someone to pay when the invoice has been outstanding for too many months!
Invoicing software includes instant reporting and this gives you an overview, at any time, on the financial status and cash flow of your company. Instead of being caught out by surprise, you can make a plan well in advance, if cash flow becomes a problem. This way, you can rest assured the project is not affected in any way.
4. Issue Invoices on the Go
Automating your invoice system means you can do business wherever you are, whenever you want to. This not only saves you time to focus on the other essential aspects of overseeing a project site, but it gives you the freedom to issue invoices on the go.
Many invoicing software companies such as Billdu or FreshBooks have designed software which allows you to create and send invoices almost instantly. Some companies have downloadable apps which means you can issue invoices directly from your iOS or Android SmartPhone. How’s that for convenience?
How to Pick the Best Invoicing Software for Contractors
Picking the best invoicing software for your business as a contractor does mean taking into consideration some key features. Not all invoice software is suitable for contractors so to help you pick the best invoicing platform for your business, we’ve listed key features you should look out for:
- Templates: An online invoice generator allows you to create a professional invoice in no time at all. Prepared invoice templates that can be customized to match your brand will impress your client.
- Generate other documents: Having the ability to generate estimates, proforma invoices, delivery notes, and purchase orders simplify issuing other documents to clients, suppliers, and vendors when running a project. Looks for these features in your chosen invoice maker.
- Automatic sending and recurring invoices: Being able to send your invoices automatically saves you time and creating recurring invoices with a few clicks is essential when growing your business.
- Tracking Income and Expenses: Make sure the software you pick makes it easy to track all payments, both incoming and outgoing. This allows you to manage your cash flow more efficiently while keeping on top of your project’s income and expenses.
- Reports: Instant reporting and making use of charts keeps your eye on how your business is performing. This is essential in order to keep your project running smoothly.
- Online payment facilities: By adding a pay button to your invoices, your clients are likely to pay faster, keeping your cash flow healthy.
- Invite your accountant: By giving your accountant access to all your invoices and transactions online, you’re making it easier for them to do accurate financial reporting.
- Downloadable app: Your work entails being on-site most of the day. This means your paperwork can get behind. By downloading an app to your Smartphone or tablet, you can issue invoices while on site.
When picking invoicing software, you want to ensure it fulfils all your requirements for issuing invoices. The main factor for installing this type of software is to ultimately save you time and money. The platform should be easy to use and reliable. You also want to know that you can issue invoices on the spot if necessary.
Being a contractor entails a wide range of roles including operating a basic accounting system. While hiring an accountant or bookkeeper takes a lot of pressure off you, issuing invoices is still one of your key functions. We, at Billdu, understand this and our invoicing software is designed to meet all your invoice requirements. What’s more, you can rest assured your invoices look professional, impressing your clients while getting paid timeously.
Why not join thousands of other contractors and install Billdu invoicing software today? It’ll be the smartest financial move you could make for you and your business.