Small businesses should send billing statements to customers on time. If a customer doesn’t receive it, they won’t know their due dates. Late payments have a negative effect on your business’ cash flow. That’s why it’s important to improve your billing process. Doing so allows you to collect sooner and informs customers of their due dates.
Here are ways to improve your small business’ billing process.
Use a Specific Date
Your small business’ profitability metrics will be low, if you fail to collect payments on time. A billing statement without a due date is problematic. A customer that doesn’t feel the urgency to pay will keep delaying payment. Make sure to include specific dates in the statements you send. Avoid using vague terms such as “due x days from receipt”. This can be open to interpretation, especially if its receiver doesn’t open their inbox or check their mail frequently. Give your customers more than enough days to pay when you send the statement.
Make Your Invoice Easy to Understand
The look and template of your invoice may seem like a small matter, but sometimes simple improvements go a long way. An easy to understand invoice allows its recipient to absorb its information easier. Use a font that is easy to read at a size that is readable. Put the due date and payment amount at the top part of the invoice. Use a different font colour for both and make its size bigger than the rest of the text.
One of the ways to improve your billing process is to follow-up regularly. This is a reminder to customers that their due date is near and they should pay. This can be a phone call, email and/or a notice letter. This shows that your small business takes collection seriously and that customers should pay on time.
A Clear Call-to-Action
Another way to improve your billing process is by including a clear call-to-action in the statement. You can add an extra sentence that includes your business’ phone number and/or email address. Tell the receiver that they can call you or send an email, if they have further questions. Inform the recipient of possible payment options, if they’re unable to pay on the due date. Other than asking for payment on the due date, you can add other calls-to-action such as those mentioned earlier.
Penalize Late Payments
Customers don’t want to incur extra charges. You can incentivise paying on time or early by stating that late payments incur penalties. State this clearly in the billing statement or the emails you send and calls you make.
Customise a Process
Not all small businesses are the same. You might want to copy the billing process of your competitors, but this may not work for you. Customise a system that your team can easily learn and implement. Use templates with a few pre-filled in data for invoices and statements. You can also use software to monitor bills and their due dates. Try different approaches until you find one that works for your company.
These are just a few of the practices that improve your billing process. Implement these to simplify your approach and allow your team to focus on more productive work. If you need assistance with some tasks, we at Robookkeeper can provide you with affordable bookkeeping for small business owners.