However, a healthy cash flow is the heart and soul of any business that moves it along and adds to its growth. That’s why it’s important to keep track of all your financial transactions and make sure your cash flow is running smoothly so you can practice your craft freely without worry.
However, invoicing clients can be a long and overwhelming process where you have to keep up with due dates and late payments. Finding effective ways to optimize this process is definitely worth your time and effort. On that note, here are some tips that can make invoicing much faster and easier.
1.Set Clear Payment Terms
What many business owners and freelancers don’t know is that the invoicing process starts before they even make the invoice. As soon as you talk details with your client, you must clearly state your payment terms so there aren’t any misunderstandings or surprises along the way. You must also clarify to your client your pricing and billing process so that they know you are being completely transparent. The terms should basically state whether you bill by the hour, by month, or by project, the exact work scope and when it will take to complete, types of payments you can accept, and when you’ll expect to get paid.
2.Timing is Everything
It’s important to be time-conscious during your entire invoicing process. The best way to go is to invoice as quickly as possible as soon as you deliver your end of the service or product or when reaching a key milestone. Start by choosing a clear due date for the invoice rather than just ‘due’ upon receipt. In choosing the date itself, studies show that if you’re invoicing on a monthly basis, the invoice should be at the beginning of the month. If you’re invoicing weekly, do it on the weekends since they are usually paid within 29 days, 10 days faster than mid-week invoices.
3.Automate It All
For a faster and more accurate invoicing process, ditch the old manual way and automate as much as you can. If you’re constantly dealing with many invoices, there will be more room for error and you’ll have to follow up with each one. Sending invoices online and opting for online payment methods will save you a great deal of time and effort. You can also use an invoice payment workflow like YoozPay that would generate recurring invoices for clients, track multiple invoices simultaneously, and maintain client data.
4.Use Invoicing Templates
If you don’t deal with a large number of clients and don’t need a dedicated software but still have a lot to follow up with, using templates is the best way to go. Instead of listing out every item for every client, you can create a template that includes all your branding elements or use a freelancer invoice template generator for each client you or project you take on. With freelancing in particular, it’s hard to get paid on time without the proper documentation. The most important thing is to choose a template that is attractive, simple, and easy to read. It should include the terms and conditions, invoice amount, due date, contact information, and payment information.
5.Send Reminders
If you send your invoice at the agreed-upon date and the client does not pay or respond within a few days, you have the right to follow up after your payment. Try sending them automated reminders through software or by e-mail. You can even start sending these reminders a few days before the invoice due date. If it doesn’t work, set a certain penalty for late payments that increase the amount paid, which you should mention ahead in the terms and conditions. You should, of course, be considerate in case the client is facing any personal issues before enforcing the penalty because being polite and professional should always come first.
6.Require an Advanced Payment
It’s very common to ask clients for payment upfront before the beginning of a project or providing any kind of service, especially among freelancers. Most freelancers go for 50% deposit and 50% after completion while others go for 50% upfront, 25% in the middle, then 25% after completion. Requiring an advanced payment is one of the best ways to decrease payment time for invoices and managing the overall cash flow since it takes less time between doing the work and getting paid for it. It also ensures you have the money for resources needed for your work instead of paying out of your pocket.
7.Offer Incentives
If late invoices are becoming a constant issue you’re having, consider having some sort of incentive offered for clients who pay early. You could offer a 5-10% discount for clients who pay their invoices in the first few days after the invoice. Even clients that are usually always late on their payment won’t miss the opportunity to pay a discounted amount for a service or product. You can also opt for offering a discount on any future work if they pay early. This is, of course, not the ideal option, but it would mean getting cash faster, especially if late invoices are causing you to struggle with cash flow.
8.Be Consistent
Even though it can be hard sometimes, you have to maintain a certain level of consistency in your invoice process. Constant follow-up makes it easier to identify billing issues, ways to improve the process, problem clients, and how to deal with them.
Being organized and consistent also shows your clients your level of professionalism through having all the invoices clear, branded, and detailed. Schedule time during the week specifically for late payments since they would be the first factor behind your poor cash flow.
Implementing at least one of these tips will make you go through your invoicing process faster than ever. All you need is time, patience, and the right tools that will make you go paperless and allow you to keep up with all your due payments. Remember that one of the best ways to get your invoices faster is to build a strong rapport with clients and remain professional through it all, even when dealing with tardy or difficult customers.