Money has been described by financial gurus as having some qualities that are like a natural resource such as the energy of the universe or chi of the human body. It has been called the lifeblood of any business. Money needs to flow. Holding on to it too tightly can shut down its potential. Like squeezing a tube, the amount of flow is decreased by an outside or inside source. Releasing the tube opens the constriction. Increasing pressure can likewise add too much stress. Therefore, the flow needs a balance of its own.
As a business owner, when you provide something without getting monetary compensation at the time of services rendered, you extend your lifeblood or energy in the form of goods or services to customers essentially on the honor system of credit. For a reasonable flow of energy to come back to you, a healthy system of collecting payments must be followed. Successful invoice processing is one of the mechanisms in business for improving business chi if you will.
Setting Up The System For Success
It is important that whatever invoice generating and tracking system you adopt is consistent, reliable, and to be followed religiously. In order to minimize errors it should also be rigorously monitored, easy to manage, and accounted for accurately in every way. Inefficient accounts management negatively impacts the profitability of any company. The best way to maximize profits is to tighten up all areas where processes can be made to be more efficient.
Your accounts receivables are considered part of your assets, so it is important to know how to keep them from becoming bad debts. They can be sold, so it is important to know their true value. Accounts receivable processes set the procedures for collecting those owed payments on time. Whether you handle your accounts receivable in-house, work with a professional company, or outsource some of the accounts receivable process with a 3rd party printing and mailing specialist, there are ways to get started creating an invoicing system that works for your size company and number of clients.
There are a few standard things to consider before setting up an invoicing system. You have to set your payment terms ahead of time so that you and your customer know what you are agreeing upon at the outset of the transaction. Some examples of common business payment terms include C.O.D. or cash on delivery, NET 15/30/60/90 or payment due in the number of days respectively, or E.O.M. for the end of the month.
Having a contract with each client is one way to ensure that everyone is on the same page when it comes to the terms of the parts or service agreement. Using a system of giving a quote, breaking down the cost of goods and services, and possible chances of changes if something is not available for the quoted price is another way to ensure good communication before the transaction happens. However, much detail can be given to ensure that expectations are expressed and understood will benefit everyone involved in the transaction.
Errors in keeping track of your accounts receivable, the payments made, the balances, and due dates is one of the biggest failures in the accounts receivable system of any business. Tracking your accounts receivable is one of the key areas to improve when trying to clean up your financial practices. For a small business, billing often requires either an investment in billing or invoicing software or partnering with 3rd party specialists in printing and mailing invoices. In order to improve efficiency and minimize losses, accounts receivable practices are one of the keys areas where small improvements can yield huge payoffs.
Send Invoices In A Timely Manner:
When it comes to having a system of sending invoices, it does not matter so much what kind of system as it matters most when you send your invoices. Invoices should always be sent at the same time of the month according to the agreement with the client and based on their convenience. Ensure they are always correct and up to date, containing no errors or missing payments. Timely invoicing reflects positively on you and your business, instilling confidence in your clients while affecting the desired result of getting you paid on time.
Electronic Delivery and Automation:
Give up the old school systems and join the modern era. It’s true we all love the smell of leather accounting journals but when it comes to your finances, using an online, electronic method of accounting software is the only way to go. It will automatically track payments, add interest or late payment fees, and can be programmed to generate the invoices automatically. If you are not using an up-to-date software-based invoicing system for your business, you are likely wasting a ton of time and energy.
Make Paying Easy:
When it comes to making people part with their money, it pays to make it convenient and painless for them every step of the way. It is important to have every kind of payment method available to your clients and encourage paperless invoicing and auto-debit payments as well whenever possible. Give them multiple choices like credit card debt, check pay-by-phone, online payment through a website, monthly regular auto-debit, PayPal, Venmo, or mail-in check.
Offer Discounts for Early Payment:
Though a standard choice is to offer a 1% discount for early payment, that could be any amount at your discretion. Think of how much interest a bank would charge to extend credit to a customer and understand how precious a gift it is to offer even 15 or 30 days for a client to pay an invoice. It also benefits you to get the money sooner rather than later, so offering even a small incentive could offset the cost with the promptness of the payment.
Have a Process to Follow Up With Late or Unpaid Invoices:
Employee hours are costly for any organization. The time spent having to track down payments for invoices is money wasted. Make sure whatever online or automated system you have helps you keep track of overdue payments and gets your process going to resolve them quickly. The last thing you want is to have to write off overdue invoices as bad debts since that decreases your business’ net worth. Send gentle reminders at first as you do not want to alienate your customers.
Be Prepared to Enforce Late Payment Fees:
Make sure to discuss late payment fees ahead of time with each client. Having a contract signed that spells out expectations and consequences for late-paid invoices is always the preferred method of handling things. Otherwise, if you plan to charge for late paid invoices such as a percentage on monthly balances or a flat-fee monthly on top of the balance, your customer should know about it before entering into the agreement with you. Trying to enforce it after the fact will lead to misunderstandings and a questioning of your integrity.
Outsource Invoice Printing and Mailing
The most successful businesses know that outsourcing is one of the easiest ways to both minimize output and maximize input. When it comes to handling invoice printing and mailing, Towne Mailer has 20 plus years of experience helping businesses like yours streamline the bill generating, invoice printing, and mailing part of your accounts receivable process. For businesses all over the country, we offer business solutions to improve print quality, upgrade efficiency, and increase workflow. When you partner with us, you’ll save time and money and increase your financial chi.
Reach out and rely on us to get your documents printed and mailed out within 24 hours from approval every time. When you want only the best print quality at the most affordable prices sent reliably on time each month, choose Towne Mailer to be your trusted printing and mailing specialists. Contact us today for your free, no-obligation quote on your next invoice printing and mailing project.