You can’t keep the lights on without revenue, and you can’t bring in revenue without effective invoicing
Every business needs to charge for their goods or services, but effectively invoicing or billing is not as easy as you might think. Let’s face it, nobody really wants another pricey software subscription, but routinely creating something manually can eat up time that is already in short supply. So, what to do? Here are a few critical things to keep in mind if you’re thinking about optimizing your invoicing process.
The Value of the Invoice
First things first: Did you know that businesses lacking an effective invoicing system can experience a real blow to their bottom line? According to 2016 data, the value of small business unpaid invoices was $825 billion – roughly equivalent to 5% of U.S. GDP at the time.[i] Additionally, the average small business has $84,000 in unpaid invoices.[ii]
Of course, collection problems can result in unpaid invoices, but there is no way to begin trying to collect on your invoices if you can’t create and process them efficiently.
There are basically two different options for how to approach your invoices: going DIY or finding an affordable software subscription. If you go the DIY route, the best approach is to create a template that can be easily updated for each client. This may sound intimidating; but don’t worry, it’s easier than you think. And the good news is that you likely already have a program that can largely take care of this for you.
Creating a template is easy with Microsoft Word, and the software includes a variety of templates that you can download. To do this, simply go through the following steps:
- Open Microsoft Word;
- Hit “File,” and then “New,” and then on the right-hand side of the window you can search for templates or optionally select a category;
- Type “invoice” into the search bar;
- Once you’ve settled on a template, download it and prepare to customize it for your business.
Before you can begin customizing, you’ll need to gather some business information. Be as comprehensive as possible here; you want your invoice to look as professional as possible. Some elements you’ll want to include are:
- Your agency logo (if you have one)
- Company contact details: name, address, phone number, website and email
- An invoice number – for referencing purposes
- An itemized list of products or services that you have provided for your clients
- The invoice date
- The date the invoice needs to be paid
- A subtotal for all charges
- Details for how your clients can remit payment
- A total amount owed, including all applicable taxes
- Your payment terms and conditions
- A small message thanking your client for choosing to work with you
Once you have added all the above elements, save your invoice in a handy location for future reference.
If you don’t want to go through the hassle of creating your own invoice in a program like Microsoft Word, there are many options for anyone looking for a more automated approach to invoices – both free and low-cost.
When considering between a DIY approach and a software subscription, there are a number of factors to weigh. Invoicing software can offer benefits such as:
- Tracking invoice delivery and payment status
- Reducing missed payments
- Simplifying the accounting process
- Protecting key customer information from cyberattacks
Think through your business needs ahead of purchasing a subscription. If your agency could benefit from some of this added functionality, that may create enough positive ROI to justify the monthly expense.
Additionally, keep in mind that today’s modern solutions can frequently be integrated with other services – which can save you additional time. For instance, many invoicing software subscriptions integrate with payment gateways – meaning that customers can make their payments digitally rather than bothering with paper checks.
Boost Your Profitability Invoicing is the bread and butter of your business, meaning that you need a process in place that is clear, easy and standardized. Whether you pursue a DIY template or make a small investment in invoicing software, streamlining your billing process is never a bad idea and will — no pun intended — almost invariability pay off.
[i] [Infographic] The Economic Impact of Unpaid Invoices | Fundbox Blog