Tired of losing money on chaotic invoicing?
Roughly 20% of business profits evaporate when handling late payments, invoice errors, and cash flow nightmares. Chaotic and over-complicated invoicing systems bring you enormous hidden costs, and time you could’ve spent on much more profitable activities.
Let’s get real…
48% of businesses (still!) operate using paper invoices. Manual, handwritten records are riddled with errors, slow and costly, and simply plain prehistoric. Your customers are long gone if you don’t have an organized invoicing and billing system.
Simple billing saves businesses thousands of dollars and several hours of admin work every month.
Here’s what you can find in this post:
- Benefits of Simplified Billing
- True Cost of Manual Invoicing
- Hidden Potential of Automation
- Payment Terms 101
- Invoice Design Checklist
Benefits of Simplified Billing
Think about the last invoice hiccup.
It took hours to resolve, right? You probably had to go through piles of invoices or scan entire email chains to find the one you needed. At worst, someone has made a mistake, and the whole process starts again.
Billing systems run smoothly when everyone is on the same page. Your team spends less time on admin work and more time scaling the business. Your customers are charged fairly and on time. And you get paid quickly.
Better cash flow allows you to reinvest in your business sooner. Less hassle and more accuracy means more customers willing to pay on time. Less time fiddling with invoices and more time spent on critical issues.
Your business model could probably bear some improvement as well.
To help you think in terms of simplified invoicing, here’s a reminder on the 4 key “legs” you should always strive to balance as a business:
- Cost. Your pricing model is in perfect balance if you’re making a good margin while providing excellent value to your customers.
- Channel. Your distribution model works just fine if you can reach the right market efficiently.
- Conversion. The customer acquisition process is on point if you’re continuously receiving more qualified leads than you can actually handle.
- Collateral. Your branding works well enough if your products or services are recognizable, consistent, and provide your audience with the value you promise.
So, if your pricing model allows it, billing should be no headache whatsoever.
Think about how you can simplify, and scale your invoicing and billing process as another powerful lever to improve.
True Cost of Manual Invoicing
Here’s something you might not know…
Fifty percent of US invoices are now overdue. Those are billions of dollars uncollected each day. Even worse, over 33% of these invoices will never be collected.
Why?
Billing systems have become unnecessarily complex. Complicated systems are riddled with errors which cost you precious time and money. The right tools to simplify your invoicing and billing can dramatically reduce the amount of human intervention.
Confusing invoices make customers slow down with payments.
Confusing billing systems cause your team to make mistakes.
Invoices are rejected, have to be reissued, and the frustration festers. Now, add on top of that that manual invoices take 67% more time to process than invoices generated using software.
Fact is, every hour your team works on manual invoicing, fixing errors, and chasing clients, it could be working on much more profitable things.
Automated billing systems cut through the noise and enable you to focus on the business.
If you process invoices manually, you’re essentially paying your employees to do something that software could do in seconds.
Hidden Potential of Automation
The quickest way to simplify billing and invoicing is to automate it.
I hear you thinking — “Oh, automation sounds like something really costly” or “It’s probably not even applicable to my small business.” But let me tell you the secret: the best automation tools save you way more money than they cost.
Check out these numbers…86% of SMBs manually enter data from their invoices. Imagine if all that time-consuming work could be automated? Precisely what automation is there for.
The benefits of automation for invoicing include:
- Automatic invoice generation based on services or products rendered
- Automatic payment reminders
- Automatic tracking of which invoices are paid, and which are not
- Automate error detection
Automation systems to handle your billing are much more affordable than you might think.
You don’t need a huge budget to start. In fact, you don’t have to automate the whole billing process from day 1. Begin by automating the most time-consuming tasks.
You can always make your billing system more complex in future. It’s much better to start simple, then iterate. As you implement one tool, see where the gaps are, and plug them with automation solutions.
Payment Terms 101
This is a curious thing to notice…
Most business owners set their payment terms based on what they think is normal. And in doing so, they fail to meet their specific needs. Your payment terms are crucial for your cash flow.
Did you know that Net 30 is not the best payment terms for your business?
If you’re cash flow is an issue, waiting 30 days to receive payment is stressful and unnecessary. Offering a discount for early payments can be a great strategy to be paid sooner while retaining your profit margins.
Discounts of as low as 2% for payments received within 10 days work great.
Other useful payment terms include:
- Deposits for large projects
- Recurring billing arrangements
- Accepting several different payment types
Eliminate all potential obstacles to on-time payment.
Accept credit cards, bank transfers, and digital wallets. Give specific payment instructions for each option on the invoice.
Track Everything Simply
Simple billing is not only about invoices.
It’s about managing everything related to billing, from delivery to payment.
Good tracking systems are key to your cash flow.
Clients that pay late. Bottlenecks where your cash is held up for no good reason. Easy ways to get your money as soon as your customers can. Accurate, easy to understand financial reporting.
Tracking everything in spreadsheets is cumbersome. Spending hours updating a sheet full of numbers is not a good use of your time.
Tracking systems must be updated immediately, without you having to think about it.
Dashboards and graphs showing a real-time financial overview are what you need. They give you access to the information you need when you need it.
Create standard processes for all activities that are part of invoicing, and make sure your team follows them:
- When do you issue invoices? After delivery? Immediately after accepting an order? Which invoice template do you use?
- How do you communicate with customers when invoices are not paid on time?
Having documented standard processes will keep everyone on the same page.
Designing Invoices for Success
The road to simple billing begins with simple invoices.
Your invoices should be clear, easy to understand, and contain all the information your customer needs.
Invoices must:
- Have a unique invoice number for tracking purposes
- Include a clear description of the product or service rendered
- List itemized prices
- Display the total amount due in large, bold font
- Clearly display the payment terms, and due date.
Eliminate unnecessary details that clutter your invoices.
Invoicing software usually has invoice templates that look professional and contain all the information needed. Choose one that suits your brand, and use it consistently for all your invoices.
Final Words
Simple billing is a must-have for every successful business.
Your team will be able to save precious time by automating and simplifying processes. Streamlined billing and invoicing processes produce fewer errors and faster payments.
Your cash flow improves. And fewer mistakes will result in more customers willing to pay on time.
Simple billing can free up valuable time to focus on the critical aspects of your business.
The important thing is to remember the main ideas:
- Automation is your best friend.
- Set realistic, beneficial payment terms
- Make it as easy as possible for your customers to understand and pay invoices.
- Track everything, in real time.
- Document standard processes that everyone should follow.
Pick one aspect of your billing process, and start simplifying it. Then move on to the next area, until your billing is as simple as possible.
Don’t let invoices become a business nightmare for you. Simplify your business invoicing and billing as soon as you can and reap the benefits.
