Invoicing and bill payments go far beyond simply submitting a bill to your client. When you bill them, how you bill them and how you allow them to pay can make a difference in the speed at which you receive payments for your services.
Billing is one of the most important things a firm can do to keep themselves cash flow positive, but it is one of those tasks that can get lost in the shuffle of day-to-day work.
Without solid billing practices in place, you can lose the momentum needed to bring in payments in a timely manner. In running your practice, it is important to be aware that both the quality of work and your delivery can impact when and how much clients pay.
If, for some reason, work is sub-par, clients are less inclined to want to pay for it, or may try and negotiate a lower rate. They may even delay payment, or not pay at all until pestered to do so, reasoning that the work isn’t worth what they are being charged. Good quality work prevents those kinds of discussions from even coming up.
The same is true of work that isn’t completed on time. Work delivered late leaves the impression with the client that they are not a priority to your firm. If they aren’t a priority for you, why should they make paying you a priority? To keep your income flowing, ensure you aren’t giving clients a reason not to pay you, or a window of opportunity to dispute how much you’ve charged them.
Probably the most important, and most challenging, strategy for getting paid on time is that invoices must go out on time, and they must be accurate.
Time entries, something most professional organisations struggle with, is critical for accurate and timely billing. Entering time regularly also means invoices can get out quickly, which in turn leads to more consistent payments from clients. If partners and billable seniors don’t have the time to enter their hours daily, have support and administrative staff help them by collecting what they have worked on and entering it for them. It is almost impossible to remember at the end of the month how many hours were spent on a project or account from the beginning of that same month.
When working on a project, aim to send the invoice along with the completed work. A client is more inclined to pay a bill when they have the high-quality product in their hand, and they see the value in what their money has bought. Invoicing later means the project is no longer top of mind for the client, and that lost time can mean they have also forgotten how important the work you’ve done for them was. Also, delays in invoicing signal to the client that you’re not overly concerned about when you get paid, so why should they be?
One more item to consider that can increase the speed at which you get paid—and improve your cash flow—is enhancing your invoices and payment methods. The right amount of detail, presented in the right way, and with easy payment options all increase the likelihood of getting paid quickly, and with little or no follow-up.