I can’t count the number of times that I have had the billing and invoicing conversation with friends and colleagues. Seems that I was not the only one who went through the nightmare that is trying to get clients to pay. This seems to be an especially big problem for those that are in business for themselves, or have a small company, maybe sole proprietor. Over the last few years I have developed some strategies and implemented some tools that have tamed the invoicing beast. Lets take a look at some tactics and tools.
One of the biggest mistakes I made in the beginning was to start the billing cycle when the client signed the contract. What ended up happening was a whiteboard full of clients with billing dates spread out all over the month. In short it was a nightmare, in all aspects. It meant that I was invoicing constantly and had to be sure I was sending the right invoice to the correct client, and if the client was late with the payment, the situation got worse. This completely drained me emotionally, and I wasted valuable creative time on the part of the business I dislike the most.
Invoicing is on the 1st or 15th period. If I have a client that signs in between those dates, work doesn’t start until the next nearest date. If they really are anxious and have to start immediately, we just bill them immediately the percentage until that next date. That way we are invoicing only twice a month. This one thing has made a huge difference in my attitude towards billing…
Clients usually want all the work done yesterday, and when it comes time to reconcile an invoice, they feel that time is on their side. What they don’t understand is that unlike an invoice for product, electricity etc, this is our pay checks. We depend on these funds to pay our bills, and put food on our tables. It is guaranteed that if their employees’ paychecks were constantly late, they would have no employees.
Every invoice that goes out is labeled “due upon receipt” no exceptions. We also place a clause in the contract and have clients initial that they have read and acknowledge the clause. That clause states “ if invoice is not reconciled in 10 days of invoice date, all work on the account stops until paid in full”, and we stick to it. We have had very few problems with this issue since instituting this clause, the trick is sticking to it. I know it seems harsh, but again, this is our livelihood, their customers are expected to pay on time when services are rendered, it should be no different for you.
Payment Methods Differ
With all the options for payment these days, and different clients having different attitudes about payment methods it can be tough to get everybody on the same system. In our area many business owners are still skeptical about paying online and prefer to be billed by an invoice.
We have come up with three different methods of receiving payments that seem to work well.
1) Traditional invoicing using snail mail or email: Invoices are prepared and sent out a few days prior to the due date so that they arrive on the due date. This we use ZoHo: the nice thing about ZoHo is, is that it is pretty versatile in that you can set up recurring invoices, as well as email the invoice to the client.
2) Paypal: Paypal works great and makes invoicing easy, although there is a percentage that gets paid to paypal for that convenience. A small price to pay to get paid in our view. The other nice thing with paypal is that you can capture funds from a credit card each month. The other nice thing about paypal is that it gives you a complete line of data points, money sent, invoices sent, invoices not completed and you can set up a reminder to be sent to the client if they do not reconcile the invoice on time.
3) Square: Square works great, it is a little tool that plugs right into your smartphone, which makes your smart phone able to receive credit card payments. The card is just swiped and the money goes into a preset account that is connected with your phone. Again, square takes a percentage of the total amount, but still again it is the difference between getting paid or not many times. We often set up our monthly meetings with local clients to coincide with the billing date and have them pay the invoice right then and there at the meeting. Square was developed by Jack Dorsey (co-founder of Twitter) and is the cheapest at 2.75% per transaction per card.
Finding that Comfort Zone
Finding a comfortable way to handle this part of the business is invaluable. Honestly, whether you are handling this yourself, or have someone in your office doing it for you, finding a way to get this done, get paid and create more time to actually run your business is the goal. Once we started implementing these simple ideas, we found that we were less stressed, more creative and had more time to do the things that we enjoyed in our business venture.
What things do you do to tame the invoicing beast?