Search US website

6 Tips for Improving Your Invoicing Process

American Express OPEN

1 Comment

April 7, 2010

Related Topics:

OPEN Forum Message

Test Your Business Skills

Take one or more of OPEN Forum's Crash Courses on topics like Leadership, Search Engine Marketing, Facebook and more.

Learn more

Featured Response

“It's easy to see how AcceptPay helps small ...”

Marc Spangenberg

View all comments  

An efficient invoicing process is essential to maintaining a healthy cash flow. Smart invoicing can significantly shorten the time between when you complete a project and when you get paid for it. It can also reduce the time spent sending invoices and handling payments.

No matter what your current invoice process is, you can take steps to help improve both timely payments and customer relations.

1. Check references
Before establishing relationships with new customers, research their credit and payment histories so you can avoid companies with payment issues. Have them complete a credit application and check their references. Conduct a credit check with a credit reporting agency, such as Dun & Bradstreet® or Experian™, before accepting a large order. Consider requiring a deposit from those whose credit reports raise concerns.

2. Adapt to your customers’ preferences
Contact new customers to inquire about the information they require on invoices. Time spent on this process can go a long way toward ensuring that your invoices move quickly through a customer’s payment system. Here are some things you’ll probably want to ask your customers concerning what they need on an invoice:
  • Do they need a purchase order number, or will your company invoice number suffice?
  • Is an itemized breakdown of work completed required on an invoice, or just a general description?
  • Should you provide a description of the goods or services delivered?
  • Do you need to include your Employer Identification Number on the invoice?
Also determine how your customers like to receive invoices. Some may prefer faxed invoices; some require mailed copies; and others will only accept invoices delivered via email. Consider setting up a receipt process so you’ll know your invoice was actually received.

3. Invoice immediately
Send invoices the day a project is completed or as soon as an item is shipped. By waiting even a few days, you may miss a customer’s payment cycle and significantly extend the time it takes to receive funds.

4. Set clear terms
Instead of stamping “Due on receipt,” include a specific due date. Companies that pay in 30 or 45 days will follow their own schedules, but it gives you the chance to put your terms in writing. If you offer trade terms, such as discounts for early payment, use the actual dates involved instead of simply including your generic terms.

5. Build a document trail
Document all communications and telephone conversations about invoices so they are filed for future reference. Keep track of requested changes in writing. This trail will help when going after late payments. Develop a payment tracking system so overdue payments are brought to your attention. Consider using software that tracks payments or ask your bookkeeper, CPA, banker or financial advisor for suggestions on ways to do this yourself. As soon as you send an invoice, put the details into your tracking system. Also record the date you receive payment.

6. Make collection calls
Promptly follow up on late payments with a telephone call. Reaching out can often clear up misunderstandings. Adopt a matter-of-fact manner for these calls; assume good intentions on the part of your customers. Before the conversation ends, determine a specific amount due and date of receipt. Have someone other than you or your customer-facing staff make collections calls if you are concerned about damaging customer relations.

This article is taken from an Insight Guide on how to Improve Invoicing and Payment Processes. 

To learn more about AcceptPay, an online tool that lets you electronically invoice customers and accept online payments – all in one place – visit acceptpay.com.

What do you think?

Member avatar

Change social network

Join the conversation ( 1 )

  • Marc Spangenberg 2 years 1 months and 21 days ago

    Marc Spangenberg

    It's easy to see how AcceptPay helps small businesses accomplish the goals set out in this article. Once a buyer decides to pay, the tools offered in AcceptPay make it easy. Before anyone gets to that stage however, a seller must decide if a buyer is creditworthy and likely to pay for the product or service. Even with a D&B or other credit report, it is very difficult for a small business to make the decision to extend credit. Retailers outsource those decisions to the credit card companies and for a small fee are relieved of that stress. B2B businesses can also outsource the credit decisioning and get advance payment similar to the retail establishment.

Crash Courses

Tax Deductions for Your Business

Think you're paying too much in business taxes? Learn more about some possible deductions with our latest crash course.

Launch Course

Javascript is currently disabled. Please enable javascript for the optimal OPEN Forum experience.

All users of our online services subject to Privacy Statement and agree to be bound by Terms of Service. Please read.

© 2012 American Express Company. All rights reserved.