To deal with invoices This might be one of your least favorite tasks, but when you’re a small agency it’s obviously one of the most important. The best way to manage invoices is to use a sample invoice and create a strategy to generate, send and track them. Good invoice management promotes a steady cash flow, alleviates accounting problems and saves you time.
Let’s take a look at ways to get a handle on invoices so you can get back to work.
1. Choose the right type of invoice for the job
There is no one size fits all invoice template. Different payment plans work for different projects, so before you start working, talk to your client about a payment schedule that works best for you and agree on a plan. Here are some options to consider:
- Multiple payment invoices: Instead of paying you in a lump sum, your client can pay you on a personalized payment schedule based on milestones, such as an initial deposit and the remaining balance, an initial deposit plus three equal payments over the life of the project, or any other schedule you determine. Whatever schedule you set, it’s a good idea to also send out a final invoice at the end of the project detailing what work was done and what was paid.
- Recurring invoices: For ongoing projects for the same client, it makes sense to plan regular payment at regular and agreed intervals, for example weekly or monthly. Scheduling makes sending invoices part of your workflow, and hopefully your customers will follow suit and get into the habit of paying on time.
- Final invoices: At the end of a project, send a final invoice to describe the work that was completed and the holdback invoices that were sent. Detail whether these down payment invoices have been paid and list any final amounts overdue. Even if the work has been paid in full, send a final invoice to close for you and your client.
2. Manage invoices online
A quick way to reduce headaches and streamline your invoice management is to take paper out of the equation. Paper invoices tend to pile up (for you and your customers) and a headache to deal with. Plus, it’s easy to lose track of whether you’ve sent an invoice and it’s been paid.
With online programs like Square invoices, you can send business invoices via email, text, or link from your computer or mobile device, and check the status of each invoice, including whether your customer has viewed, received a payment reminder, or paid the invoice. You can also send invoices from your device using the billing application and your customer will not be charged any fees payable.
Billing software with Square is free with no monthly fees. You only pay for processing when you accept debit and credit card payments and ACH wire transfer payments.
3. Avoid common delays
Even if you use online invoices, send your invoice immediately and have an agreed payment schedule, there are other barriers to getting paid on time. Here are some issues that could slow down payment:
- You sent the invoice to the wrong person: The project manager or primary contact may not be the person doing the accounting, so before you face a long back-and-forth (which further delays your payment), ask your customer to whom you should send the invoice.
- You were not clear on the terms: If you think the invoice should be paid within a month and the customer thinks it shouldn’t be paid until the project is complete, you’re in trouble. To avoid an uncomfortable and frustrating situation, make sure your client accepts your terms (in writing) before you start working. You can also consider setting a shorter payment window or initiating automatic invoices to ensure payment on time. You can also use the Square Invoices “personalized text” section to clearly indicate your payment, cancellation and refund policies.
- You sent the invoice on a day that did not suit you: Customers are the least likely to pay an invoice they receive on a Sunday. But when you send an invoice on a Thursday, you have the greatest chance of getting paid within two days. Determine a payment schedule that results in the fastest payment to your customers.
4. Manage the invoices sent in your invoicing application
Sometimes errors occur or you need to modify an invoice that you have already sent. Fortunately, Square billing software makes it easier to manage changes to past invoices. Editing, canceling and resending existing invoices can be done directly from your mobile device with the billing application.