Advice On Billing Practices

Very few entrepreneurs and small business owners engage fully with the accountancy functions of their company. After all, most people get into business to make money from their specific skills, not to learn about billing practices and invoices. The simple truth, however, is that without mastering at least the basics of effective billing, your company will be at a disadvantage in comparison to all of your competitors.

Billing your customers effectively doesn’t have to be time consuming or complicated, as long as you put in the preparation time that is required, and involve everyone in your company to some extent. Make sure not only that you have an organised filing system and database for sending out invoices and receiving payments, but that everyone in the business understands the importance of this function. Simply put, if you don’t invoice properly and don’t chase up payments, your employees will not get paid and the company won’t make any profit. This alone should be enough to motivate everyone to take billing seriously.

Ensure that once a job for a customer is complete, the person responsible for it immediately generates the invoice. This is where involving everyone comes in handy. Rather than having to pass invoicing to a central person, train everyone within the company to generate invoices themselves. It needn’t be a complex process, and by doing this you ensure that it is done swiftly, and that your accountancy function isn’t overwhelmed by basic tasks which can be done by anyone. The staff member in charge of invoice control should be coordinating the process, not doing everything themselves. The coordination function is about keeping accurate records and making sure nothing slips through the cracks, rather than allowing everyone else to forget about the importance of good billing practices.

Any invoices which you send out should be clear and easy to understand, with payment terms which allow no wriggle room for the customer. Give an exact date on which payment is expected, and be clear about the job to which the invoice is related. It is vital that your customers get the impression from the outset that your billing function is professionally run, and that if they do not pay they will not get away with it for long.

As long as you have generated this impression from the beginning, there should be no problem in following up your invoices when they have not been paid. Check each week for outstanding invoices, and make chasing them a priority task. Strive to strike an appropriate balance here, behaving firmly but fairly. You certainly don’t want to be a pushover, but remember that the people you are dealing with could be repeat customers, and that it is never a bad idea to allow a little slack. Above all, don’t leave the chasing up process too long. Even if you think you don’t need the money, you must get into the habit of chasing each invoice as if your cashflow depended on it – because it does!

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