Many small businesses struggle with building and maintaining a seamless invoicing process. This results in delayed payments and conflicts with clients, leading to unpredictable cash flow and a bad reputation.
It’s a shame, because invoices are non-negotiable elements to running a healthy business, and when handled properly, they can be extremely helpful. Invoices are legally enforceable financial agreements between a client and a business, where the client agrees to pay for the services offered by the business. They also serve as a record of financial transactions between the client and the business.
In this article, we’ll tackle four common invoicing problems that hurt small businesses, along with some recommendations for addressing these issues.
1. Relying on manual invoicing processes
Creating an invoice consists of many steps: adding the ID, mentioning the company details, entering the client’s details, highlighting the payment terms, etc. Even though most of these steps are repetitive, they are still time-consuming and frustrating when done manually.
Even after creating the invoice, sending it to the client and reminding them from time to time through follow-ups makes the payment process much longer than necessary. On top of that, the status of these invoices needs to be updated manually to maintain transparency with the client.
This hurts businesses in three ways:
- Creating manual invoices and following up on payments manually is a lot of work. More importantly, the time spent on this can be better spent on improving the quality of services.
- All of this friction further delays payments from the clients. This is significantly difficult for small businesses that need a steady cash flow to pay their employees and overhead costs that keep their business running.
- It makes it difficult for the clients to check the status of the invoices on their own. They will have to contact the business, which, apart from increasing the workload, reduces transparency.
This challenge has a simple solution. A system that automates the invoicing process, sends follow-ups automatically, and updates the payment status to ensure transparency with the client.
Managing and maintaining multiple applications for a system that completely automates the invoicing process while increasing transparency can be difficult for small businesses with limited resources.
Fortunately, vcita provides all of the above in one tool. vcita automatically creates and sends invoices to clients at the end of each billing cycle, with an included payment link, through a channel that is convenient for the client. It also sends follow-ups and reminders in case the payment is not completed. The client management portal records all the transaction details, too, enabling both the business and client to stay aligned.
2. Contending with client disputes
Let’s say you’ve successfully delivered services to your client, generated an invoice, and sent it over. However, instead of getting paid, you receive some complaints from your client who is unhappy with the bill you sent over.
Disagreements with clients over invoices happen for multiple reasons. It could be because they were expecting something different, or they were unaware of the payment terms. This slows down the payment process, and the business has to spend more resources in terms of time and manpower to resolve the conflict and get the invoice cleared.
Although you can resolve this through fact-based discussions and offering the client alternatives, such as discounts on their future purchases, the best solution is to prevent the possibility of these kinds of situations altogether.
The best way to prevent, or at least extensively minimize, the possibility of conflicts with your client over payment terms is to be on the same page related to the exact terms of service. Since chalking up an agreement on paper is time-consuming, to say the least, the ideal solution is to have a legally binding digital contract that spells out your payment terms and service scope.
GetAccept lets you securely authenticate the electronic signatures of multiple individuals through various methods such as SMS, or BankID while getting the legally binding agreements on your terms of service from your clients. It complies with the eIDAS, ESIGN, UETA, and GDPR regulations and has users in over 50 countries.
3. Not sending itemized invoices for services
Sending an itemized bill to clients is much easier for product-based businesses, as they can share the usage history and bill them accordingly. However, it can be challenging for service-based businesses.
Not sending an itemized invoice for the services provided decreases transparency between you and your client as they won’t know the specifics of the bill. This ambiguity is one of the major reasons for conflicts when you are getting paid.
As we mentioned in the previous section, these kinds of conflicts add additional roadblocks between you and your payments, as you can end up spending even more resources to remove them. Fortunately, there is something you can do to ensure this issue doesn’t arise.
By using a tool like Time Doctor, you can send an itemized bill where you can give proof of your time while providing the requested service. This will back up your invoice with timesheet evidence, thereby helping you receive payments faster. It will reduce conflicts as well, which effectively increases your chances of repeat business.
Time tracking data can also help increase your employees’ productivity. Consequently, you can manage payments more accurately and also improve your ROI.
4. Failing to assist clients during the payment process
A client can face a lot of issues while paying a business for their services. For instance, there could be a transaction failure, or their card might get declined.
In situations where you require payment before delivering services, this causes massive distress to clients, because this is the step where they are eager for the value you are offering. It can also represent a huge challenge for you as a business, as you have already done the work, in terms of reeling them in and getting them ready to make a purchase, but might lose them in the most important moment: getting paid.
A lot of things need to go right for a successful digital payment, and you need to be aware of all the issues that could pop up and be ready with solutions. Research suggests that 47% of adults in the US will abandon an online purchase if they cannot find a quick solution to their issues.
In these situations, you as the business owner should provide assistance as quickly as possible.
By using a customer service software like Hiver, you can assist your customers through live chat, email, and call if they are facing challenges while completing payment. Furthermore, you can create a knowledge base of articles about common challenges they might encounter, equipping them for self-service.
Summing up
As straightforward as it may seem, invoicing often comes with its own set of challenges. Fortunately, with the help of the right tools, you can build a seamless invoicing process for your budding business:
- Automate your invoicing process: Generation of invoices, sending payment reminders, and updating the status to increase transparency between you and your client.
- Set payment agreements: By agreeing with the terms of service beforehand through a legally binding digital contract, you can decrease the chances of conflicts with your clients while getting paid.
- Send itemized bills: Keep detailed records of your services to back up your invoice to ensure there is no ambiguity during the payment process.
- Assist your clients during payment: Create a detailed knowledge base to enable self-service and be ready to give live support to your clients in case they run into trouble while completing the payment.
We hope this post helps you in making your invoicing process smooth by removing the aforementioned roadblocks.
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