One of the most essential systems you can create in your business is a billing system. While there are many facets of finance that are important today I want to focus narrowly on this one aspect.
Even if you have commitments to get paid from clients, if the invoices are not going out and the income is not coming in then you’re not in business, you’re running a charity.
Being able to invoice and bill your clients for work has to begin with a solid contract that specifies how your time and work is compensated and the turnaround time for payment. Without this it’ll be a constant battle of “you said, I said” with both parties looking out for their own interests.
If you start with a contract the second step has to be get payment up front. I know this goes against a lot of our beliefs as employees, but you’re no longer an employee. You’re a business owner, get used to being uncomfortable.
Whether you require a deposit, first payment or other financial commitment, getting payment up front is the best way to you’ll get paid. There are a few models where this doesn’t work but if you’re unsure test it out.
With that first payment out of the way it becomes much easier to collect the remaining amounts. And here I have to give a strong recommendation to automate the process. Imagine for a moment that you offer a monthly service will variable package rates to 20 clients. And every month you have to individually bill those clients or run their credit cards.
It would be a nightmare and quite possibly keep you from adding more clients or services because of the additional time it would require.
Instead set up your recurring or installation billing in a service like Infusionsoft where you can set the parameters and forget about it. Every billing cycle the payments are drafted automatically, receipts can be sent by email, and the income is deposited into your merchant account.
A great benefit of automation is that even if you have trouble collecting, that can be automated as well. If a credit card bounces you can trigger a sequence of emails to the client asking them to log in and update information and, in sophisticated systems like Infusionsoft, trigger notifications to your team for follow up. If you choose to you may also decide to stop working or withhold access until payment is confirmed.
When it comes to billing you can be low tech or high tech, but you’ll likely need to always be high touch. But what does “high touch” actually mean? In a billing system it could mean calling your client after their first payment is processed to say thank you and set up the first call or appointment. Or noting when the credit card expires and setting a reminder to email them for a new card the month before. Sometimes all it takes is calling when a payment is past due to have a conversation. These are just examples about how you can “touch base” with your clients.
By combining a powerful system for billing and automating as much of the process as possible you’ll save money in these key ways:
less time chasing payments
no more working for free
automatically assigned late fees
steadier income with automated billing
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