When you start your own business, there are a lot of things to think about. You’re concentrating on that thing that you do best and may not even consider some of the accounting tasks that need to be done. Invoicing could be one of them.
First of all, what do we mean by Invoicing? It’s pretty simple. If you want to be paid, you need to send your customer an invoice. It’s the document that explains what you sold and how much you charged for it. Your customer wants to see this document for a couple of reasons. First, he wants to be sure you are expecting him to pay the amount of money you agreed upon when you decided to do business together. Second, he needs documentation for the IRS. If he’s audited, the friendly IRS representative will ask for proof that he paid what he says he paid and to whom.
Keep in mind, too, that some people are waiting for that invoice before they put your company in their queue for getting paid. If you don’t send an invoice, you aren’t getting in the queue. You want to be in that queue, don’t you? Near the top!
What is the best system for managing your invoices? There are a few things to consider:
1 - How is your invoice getting to your customer? Automate, automate, automate! Do you want to be in the pile of other papers that came in through the regular mail? No, you really want to be delivered electronically. You want to hit someone’s inbox so that all they have to do is transfer that document directly into their accounting system. Nobody wants to scan and attach a document. Even worse, nobody wants to keep paper in file folders.
2 - How are you getting paid? The best part of electronic delivery is the “Pay Now” link. How easy is it to get paid when all the customer has to do is hit a link in the email? Everything he needs to pay you is literally at his fingertips. He can look at the invoice, check that it’s what he expected, and hit the button for payment. Fast and easy.
3 - Is it going to the right person? From the beginning of your business relationship with this customer, make sure you know who will pay the bill. It does you no good to follow all the efficiency tips if you send it off to someone who has no authority to pay. Make this part of your discovery process. Who pays the bills? You don’t want to be deleted!
4 - What is your payment schedule? What is your customer’s schedule? Do they agree? You should cover terms in your initial conversation with this customer and document them in your paperwork. Make sure the terms are clearly stated on the invoice. If you don’t list the terms, when is your customer going to pay you? When he gets around to it, most likely.
5 - What’s your Communication policy? If you aren’t paid right away, it’s a good idea to send a friendly reminder a day or two before the due date. If that doesn’t get results, try again a few days after. One thing is certain - if your customer is looking for an excuse not to pay, your silence feeds his procrastination habit. Don’t facilitate late payment! Communication is quick and easy. You don’t have to just ask for payment. You can also let your customers know how much you appreciate the business. A heartfelt thank you is never a bad idea.
The proper management of your invoices may sound like a lot of work to a new business owner. You just want to concentrate on doing your thing and have all the above happen almost magically, right? Then you want to use InvoiceSherpa. It’s the perfect app to integrate with Quickbooks Online to take care of all of the steps above in managing your invoices. You can customize the emails that go out before and after payment is made. You can set reminders. You can even have it add late fees if need be.
You didn’t start a business to spend your days chasing payments. Use InvoiceSherpa to manage your invoices, and you can get back to doing what you love.