Best Practices for Client and Customer Invoicing

For many small business owners, especially those at the beginning of their career, cash flow can become very tight from time to time. When payments don’t come in from customers like they’re supposed to, your entire budget – including both personal and professional expenses – can be completely thrown off. It’s mentally exhausting to deal with unpaid invoices, too, which can wreak havoc on your productivity. Here’s how to invoice properly and get paid even if you’re just starting out in the small business world.

Clarify Invoicing Procedures

You should be clear about your billing process from the get-go. First, know the information that your customers need themselves or need to provide, such as a W-9 or a specific billing address. If you accept PayPal payments, customers may want the bill sent to their specific PayPal e-mail address instead of their primary business address. Second, double-check with the customer about their preferred form of being billed. If you usually bill online but you have a customer who prefers getting paper bills in the mail, you’ll want to make sure to bill them in whatever method ensures they’ll pay, so long as it’s in-line with your policies. Third, clarify when you’ll be sending the invoice. Some small businesses invoice the same time every month, while others may invoice depending on the work calendar for the specific client. Lastly, make sure you know who the invoice is supposed to be sent to. Your point of contact isn’t necessarily the same person who’s going to pay you. You also may need to send copies of the invoice to additional people or departments. If you can get all of this figured out in the beginning, you won’t have to deal with unpaid invoices while you’re working out the kinks later on.

Clarify Invoicing Policies

How do invoicing policies differ from procedures? A policy could be that you don’t offer refunds, while a procedure could be the way the bill is sent to the customer. Policies are stringent, while procedures may vary to suit the customer. Every invoice should specify payment terms, including when the invoice is due (even if it’s due on receipt), offers for advance payment and penalties for late payment.

Followup After Your First Invoice

When you’re invoicing a customer for the first time, be sure to send them a separate e-mail confirming that you just sent the invoice. You’re not doing this because you can’t depend on your own software or process, but instead to give the new customer an extra reminder that the invoice is in their inbox.

Choose Your Invoicing Software

While you might pay a monthly cost for invoicing software, it could save you a lot of time in the long run, especially if you invoice a high number of customers or clients frequently. You can keep track of billing and promotions, as well as see which customers pay late and which pay early.

Your customers will also see that your invoicing process – and seemingly the rest of your business – is organized and professional. Plus, they’ll know that if they don’t pay, their missing payment won’t just slip through the cracks and be ignored. With invoicing software, you can also run detailed reports for your own reference, in the case that a customer asks to see their billing history, or if they’re giving you a hard time about how much they’ve paid.

Offer Multiple Payment Options

It’s fine if you prefer a certain payment type and if a majority of your clients pay that way – that’s more convenient for you, which is great. However, you need to give clients multiple payment options, too. By accepting PayPal, credit cards and even checks, you open yourself up to the possibility of more customers. If you send online invoices, make sure they state that offline payments are also accepted.

Choose the Right Payment Processor

A lot of businesses work with PayPal for invoicing, but there are other options available, like Authorize, Cayan and Stripe. With PayPal, you’ll pay a 2.9% and 30 cent fee on every business transaction, and this fee is pretty much standard with the other credit card processors as well. With Authorize, you’ll be charged an initial setup fee, a monthly fee, and fees for international transactions on top of the standard fees. To find the best payment processor for your specific business needs we recommend reviewing the options at SMB Reviews Merchant Services.

To choose the right payment processor for you, weigh the options. Decide if you want to accept payments by phone and via a mobile device in person as well as online. Decide if you want to accept only standard credit cards or if you’ll also accept things like Bitcoin or Apple Pay. If you need subscription or split payment billing options, you’ll want to find a processor with these features. You’ll also want to weigh the international features of each processor if you have a lot of customers overseas.

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SMB Reviews
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SMBReviews is committed to providing small and mid-sized business owners with the information and resources they need to select the best service or product for their company.

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