Technology has allowed businesses to make substantial improvements in their customer invoicing processes. The good news is that when you implement these technologies, you will almost always get paid much faster. Here are five areas to rate your own invoicing process.
1. Invoice Creation
The best way to create all of your invoices is by the push of a button from systems that already have all of your data – here are the major methods:
- Using the invoice feature in QuickBooks (memorized invoices and batch invoicing are two very fast methods)
- Time and billing, if you bill hourly – you can do this with QuickBooks or 3rd party software that integrates with QuickBooks
- Estimating and project management, if you use proposals – you can do this with QuickBooks or 3rd party software that integrates with QuickBooks
- Customer relations management (CRM) systems that have invoicing as a feature (and hopefully integrate with QuickBooks)
- Point of Sales (POS) system that track open accounts – Intuit’s POS sends house accounts over to QuickBooks as invoices with a click of a button
There are a few key best-practice concepts to follow at this step:
- Eliminate any duplicate data entry you can. You should only have to enter your invoicing data in one place, and it should flow to every other system that needs it.
- Automate as much of the process as possible. Never start in Word or Excel, because this always means duplicate data entry somewhere.
- Have an easy approval process so someone else can do the data entry if needed.
- Keep your invoice data real-time so you can benefit from the next step, which is….
2. Invoice Delivery
How you create your invoice will vary by the type of business you have, but the main objective is to make sure the invoice is approved quickly and sent out to the client as soon as the work has been done.
The only way to do this is electronically. If you’re still printing, stuffing, stamping, and mailing your invoices, you’re losing anywhere from two days to nearly a week before your customer even sees the bill. Change that by using email or delivering the invoice electronically.
3. Invoice Terms
When do you want to get paid? Most people feel it’s realistic to aim for 30 days. But if you set your payment terms to Net 30, you’re more likely to get paid in 45 days, not 30, according to recent research by Xero, where over 12 million small business invoices were reviewed.
Instead set your terms to 13 days or less, Xero suggests, because most small business debtors pay two weeks late. Here is the infographic in case you want to check it out: http://www.xero.com/guides/invoicing/
4. Payment Method
How does your business rate when it comes to payment options? If you accept only checks, you can add another week’s delay to your payment. Instead, we recommend creating lots of choices for customers, such as taking:
- Credit and debit cards through MasterCard, Visa, American Express, and Discover
- You can set up links online (best) or receive a fax or scanned form where you can enter the card into your back office. Contact our office and we can help you get good rates from Intuit as well as fees waived.
- ACH for recurring payments that the client agrees to draft from their bank account
- Checks – we have 2 articles showing how you can speed up this process
- Intuit’s Check Solutions – enter check information faster
- Intuit Payment Network – accept checks electronically
When you get paid electronically, it’s in your bank quickly and with no effort on your part. If you bank online, you can see things immediately now (it’s really amazing!). When you receive a check, you have the overhead of preparing the deposit and making the trip to the bank. If you have hundreds of paper checks, you also have additional bank fees incurred from processing the checks.
If QuickBooks interfaces with your bank, then you save a lot of time and money not having to post those transactions.
Why not get out of the invoicing business altogether by offering a pay-in-advance option? Your Accounts Receivable balance goes to nothing, to name one of many benefits. Not every industry can adopt this practice, but if you think creatively, you might find some ways you can implement this in your business.
How did your A/R process rate on the 5-point checklist? Got some ideas for improvement? As always, please reach out if you have A/R questions or if we can help you implement your best practice invoicing system.