For many small businesses in Singapore, improving the process of invoicing can generate real gains – such as reducing late payments and even encouraging clients to pay early. Here are six ways you can improve your invoicing process.
- Highlight Weak Spots
To begin, you have to first identify areas for improvement.
An internal accounting audit is a good way to assess the effectiveness of your process. This means you need to look at what is the current process you use to get money from your clients and determine the root cause of delayed or overdue payments. Existing processes could be riddled with ineffectual steps, inefficiencies, redundancy and waste.
Keep track of information on existing processes to measure efficiency. This is crucial to performance evaluation and your ability to drive improvement in the future.
- Design Invoices to Be Clear and Effective
The way your invoices are designed affects your clients’ motivation for paying you. An invoice that is clear, readable and provides straightforward instructions for payment makes it easy and quick for your client to pay. Additionally, take care to ensure that you haven’t left out any essential information, such as a billing address.
To discourage late payments, also consider adding terms and incentives. For example, according to AutoRek director Jim Muir, the offer of an early settlement discount is usually enough of an incentive to get clients to pay on time.
- Increase Accessibility with Digital Copies
Sending a digital copy alongside a paper invoice reduces the likelihood of your payments being overlooked or forgotten.
While paper invoices are easily lost and inaccessible after office hours, the digital copy remains in your client’s inbox and will be readable wherever they have an internet connection.
- Expand Payment Options
Providing more payment options can result in fewer delayed payments as clients enjoy greater convenience. Explore different methods, such as bank transfers, checks, credit cards and online payment services such as PayPal or Google Wallet.
Additionally, if you have clients overseas, remember to factor in losses from invoicing internationally. Consider charging a small fee to cover the charges from a wire transfer or PayPal payment.
- Build Your Database to Unlock Insights
A database management system (DBMS) is a powerful tool for invoicing as it can reveal your clients’ payment patterns and provide insight into best practices, such as the best time to send invoices or when to send a gentle reminder.
If you don’t own a DBMS, you can engage a programmer and designer to build one from scratch in order to store, retrieve and manipulate invoicing data. Alternatively, the faster and less expensive option would be to purchase an existing DBMS program.
- Automate Invoicing for Results
Today, cloud technology makes it possible for small businesses to do all of the above in an automated process with a single accounting software. One such software is QuickBooks Online, which allows you to create invoice templates with ease, schedule digital invoices to be sent automatically and identify payment patterns.
Improving invoicing helps you get paid faster. Performing an audit, maintaining the clarity of your invoices, sending digital copies, expanding payment options and building a database can all shape the effectiveness of your invoices. In order to do all these things quickly, your next step is to explore automation.