Invoicing is one of the most crucial yet challenging processes in any business. Unfortunately, most home service businesses use manual invoicing to receive payments from clients and send payments to suppliers.
Despite most businesses just getting along with the inefficiencies of a poor invoicing process, the adverse effects can be pretty damaging once they catch up with you.
According to data, 23% of businesses suffering from poor invoicing processes had suppliers cancel contracts. That’s a severe handicap you don’t want to impose on your home service business.
You can streamline your invoicing process by setting up terms and policies, designing professional-looking invoices, providing multiple payment options, and investing in invoicing software.
Here’s all you need to know about the invoicing process and how you can optimize it.
What is the Invoicing Process?
The invoicing process is the series of steps a business takes to manage vendors, suppliers, and customer invoices from generation, receipt, to payment. These steps can be performed manually or using invoicing software. The latter is called automated invoice processing or invoice automation.
Most invoicing processes use an invoice processing flowchart to describe the processes taken and offer a structured guide to processing invoices in the business.
Streamlining the invoicing process is crucial for businesses to improve customer and vendor relationships and optimize cash flow.
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Ways You Can Streamline Your Invoicing Process
You can take several steps to streamline your invoicing process for accuracy and efficiency. They include the following:
Set Up Your Invoicing Terms and Policies
Your invoices should have well-laid-out payment terms and policies that describe how they should be paid.
Before making a deal, you should explain these payment terms and policies to your client. That way, they won’t be shocked by the invoice after receiving your home services. Moreover, since they had clear expectations, they’ll be able to honor the payments on time.
If possible, you should also ask the client about the payment methods and period they prefer so that both parties feel comfortable about the agreement. The client should also be aware of the consequences of late payment.
This information will make them more comfortable doing business with you and reduce the back-and-forth battles.
Design Professional-Looking Invoices
Invoice templates dictate how the client perceives your brand after doing business with it. It leaves the last impression that they’ll carry on to the subsequent encounter if they’re convinced of having another one.
Well-designed invoices show that you’re a professional brand. However, you can take a step further and personalize or customize your invoices for various clients. That way, they’ll feel more connected to the brand and well respected.
However, don’t overdo your invoice design and fill it with ornaments that make it difficult to read and understand. Instead, you should maintain simplicity so the client can still pick out how they need to honor their payments and by when.
Have a Standardized Invoice Outline
Despite efforts to improve your invoice’s design and personalize it for various clients, you should have a clear, standardized invoice outline that contains all the data you need from the customer to charge them for your services.
A standardized invoice outline ensures that all your invoices capture the necessary information with a clear structure that puts all the information in the same place for all invoices.
Therefore, picking out the required information and processing the invoice is easy for you and your customers.
You can use premade invoice templates found online if you are unsure where to start. Microsoft Office also offers a great list of invoice templates you can copy and edit for your needs.
Optimize Your Billing Times
It is natural for companies to send and process invoices as they come in. However, sending your invoice significantly impacts how fast it will be paid. Therefore, you must learn how to optimize your billing times.
For instance, if your business invoices its clients weekly or fortnightly, start sending the invoices over the weekend. Alternatively, if you send the invoices monthly, send them on the first day of every month.
Invoices sent over weekends typically get paid over 29 days, ten days earlier than on weekdays.
Monthly invoices sent on the first day of the month are typically paid within 30 days. On the flip side, those sent on the 30th take roughly 38 days.
Adding a due date to your invoice can also significantly speed up payments. One study showed that invoices with a due date are eight times more likely to be paid.
Use a Software Solution
Invoicing software is the most convenient and fastest way of streamlining your invoicing process. However, more than a third of businesses still manually process their invoices.
Automated invoice processing saves your business time and resources and reduces costly invoicing errors. Moreover, invoicing software makes your invoicing experience consistent and more customizable for the customer.
Since you can trust the software is doing a great, consistent job, you can focus on other essential areas of your business that bring you more work.
A good invoicing software will also have excellent reporting options to show you late payers, upcoming charges, and an overview of your payments.
Provide Multiple Payment Options
Different customers have different preferences when it comes to payment providers. Therefore, the more payment options you give them, the faster you’ll get paid.
According to a recent report, customers prefer more modern payment methods over cash payments. When shopping online, customers primarily pay with a charge or credit card. Digital and mobile payments follow closely as the second most-preferred means, followed by bank transfers and debit cards.
Remind Clients to Pay Their Bills
Part of invoice processing is sending frequent reminders to clients about their upcoming bill payments. Unfortunately, clients have busy lives that can suck them away from responsibilities they have to take care of.
Therefore, don’t hesitate to send polite reminders about due invoices if they haven’t responded after receiving the invoice. You can start sending the reminder a week or a few days before the due date.
In most cases, the client will pay the invoice on time after receiving the first or a few more reminders, saving themselves the extra charge or penalties imposed on late payments.
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Invest in the Right Invoicing Tools
Streamlining your invoicing processes will significantly benefit your home service business’s bottom line. Talk to a reputable partner today who’ll show you the right tools to invest in and better your business.