Erwan Kernevez, digital solution director, Neopost, looks at the ways in which you can improve your invoicing.
For companies of any size, invoicing is a vital aspect of conducting business. Essential for ensuring a regular flow of capital, it’s an even more important process for small and medium enterprises (SMEs) which don’t have the financial resources of their larger counterparts. If payments are regularly late, it’s not surprising that SMEs find it difficult to settle their own bills and can be forced to consider alternative sources of finance, such as bank loans.
The problem is that many small businesses rely on haphazard processes when creating, sending and tracking invoices. Not only can this increase payment times, but it can also portray an unprofessional image to customers. With this in mind, there are 10 basic tips SMEs can follow to ensure they have the most efficient invoicing process in place.
- Start early
SMEs shouldn’t be afraid to discuss invoicing with customers early on in the relationship. It will be easier for both parties come payment time if they know each other’s processes.
- Know who’s paying the bill
The person agreeing the deal isn’t necessarily the person who will be settling the invoice. Find out who’s in charge of paying quickly.
- Standardise your invoices
Stick to a standardised format that includes all of the necessary information. Changing layouts is time consuming, looks unprofessional, and increases the likelihood of omitting vital information.
- Terms & Conditions (T&Cs)
Ensure all payment terms are included in the T&Cs, which sets out the terms in writing for the customer. SMEs can introduce their own terms, such as discounts for early settlement.
- Be consistent
Invoice creation will be more efficient if SMEs stick to a regular process. This should include the use of a single creation tool and a clear line of approval.
- Know your customer’s preferred method of receiving invoices
Multi-channel communications mean there are a number of available channels to send invoices. SMEs need to ensure they know whether the recipient would rather receive invoices physically or digitally, as getting it wrong could result in invoices having to be reissued.
- Provide payment options
Make it easier for customers to settle invoices by accepting payments via a number of means. While BACs remains the most common method of payment between businesses, recent innovations, such as PayPal and Square, may make payments simpler for consumers.
- Track your invoices
Many find it difficult to follow issued invoices due to the complexity of tracking across multiple channels. However, if they cannot ascertain where or when an invoice has been sent, they are unlikely to know who and when to chase when invoices are overdue.
- Chase late payments
It’s often the case that SMEs won’t chase overdue invoices in order to avoid pestering the customer and potentially souring the relationship. However, with late payments regularly hitting today’s news, it’s a stance SMEs can’t afford to take. The invoice recipient has broken the agreed terms and SMEs are within their rights to chase.
- Archive digitally
Once invoices have been issued, they should be archived digitally. Then, when they need to be retrieved, for instance to resolve queries or for audits, they can be accessed instantly, saving SMEs time and effort.