If you run a business then you need to do all sorts of things to keep it running smoothly. However, if you don’t get paid, then none of the other things matter. To make sure you are invoicing correctly and you can grow your company without suffering pitfalls, follow this guide:
Upfront Rules
In general, you should never agree to do a project for a customer without setting the ground rules first. If you are creating something entirely new from scratch, then this could take a while, but it’s always worth it.
For example, you might include in your contract with a supplier that they must meet certain shipping deadlines to be paid. Another example is putting a time limit on how long your clients have to pay you in full. This could be anywhere from “same day” up to a year.
Payment Procedures
The last thing you want is for the project to be completed and the customer to not agree on the price you set. They will be surprised when they get the invoice and might ask for a refund. Set the price accordingly by communicating up front which services are included and which are extra. For example, an ecommerce store should state that a special keychain is a few dollars extra when bought with a watch.
In addition, always get half of the payment up front, if not more. That way, if something does go wrong, you’re not stuck with nothing to show for it.
Ask for More
In line with the rule above, you can save yourself from trouble by charging more than you need to survive. If the business is on too narrow margins, one missed invoice could mean going out of business. For example, you should allow for a 50% margin at the minimum for your services or products. Be willing to justify your price increase in meetings and in your sales literature by showing you much more your customer will benefit. This can save your business in tough times, or if your raw materials become more pricey to order. So have margin built in to everything you do and keep the bottom line protected.
Use Software
There are many suites of software and even websites that help you create invoices. You don’t need to draft one from scratch. Instead, just fill in the blanks and customize it to your liking. Great software for this includes: Paypal, Square, and Stripe. The UI is simple to use and allows you to save templates. This way you’re saving yourself time and can focus on the bigger things.
Automate
Once you’ve determined how to invoice in your company, automate it. Get software that already sends it out as soon as you complete a project, such as FreshBooks or HouseCall Pro. This way, your staff can move on with all the other things they have on your plate, like finding new customer to fill the pipeline with and bring in new business.
Don’t Be Afraid to Collect
If you have a client who seems to be determined not to pay you despite repeated, polite attempts to collect, you may need to consider outsourcing. Business-to-business collections is a nasty thought, but so is not getting paid — especially when you’re just starting out and resources are already tight.
Invoicing can be one of the trickier parts of running a business. After all, your skill set is running your company and making sure it grows. But you don’t have to spend all day on invoicing. Just follow the tips above and you’ll be smooth sailing with a profit margin you can be happy with.
