Billing: Be Prompt, Precise and Persistent

Billing: Be Prompt, Precise and Persistent

Billing your customers is one of the easiest things to get right, and also the easiest to get wrong. Unfortunately, many small business owners get it wrong. Your bill is your claim, your demand to be paid. If you do make it a strong demand, you could be sabotaging your ability to get paid on time.

So what makes your bill a good bill?

Are you prompt?

Your bill needs to be sent soon after you provide the product or service. I would like to see the bill go out the same day, but pick a billing schedule that works for you, and stick to it. Avoid at all costs going more than 30 days out before billing. If you cannot get your bills out at least once a month, then hire someone to do it for you. If you fail to bill your customer promptly, you are telling them that the money they owe you is not that important to you.

Are you precise?

Once again, your bill is a statement of who you are, and your request to be paid for the work you do. Your bill should be easy to read. Do not send handwritten bills.  Detail all charges, and reflect any previous payments. Clearly indicate due date of payment and how you wish payment to be made.

Years ago, I worked with a local electrician who was billing at best 60 days out, and then sending illegible handwritten bills. He had also not communicated his pricing to customers beforehand. He called me because his bills were ignored, and his cash flow was suffering. When we spoke with his customers, they told us that they could not understand his bills. We advised our customer to move to QuickBooks for invoicing, and he reported an immediate improvement in cash flow.

Another company, a web hosting service, sent his bills out so infrequently that he would often be billing for six, twelve or even eighteen months at a time. Imagine being a customer who agreed to a $ 100 monthly charge and receiving a bill for $ 1,800!

Yes, you could argue that they got “a deal” with the delayed billing, but these customers did not. Their first question was, “Where have you been?” and came up with all sorts of excuses why they could not afford to pay. We advised our customer to hire a bookkeeper to bill his customers monthly, and he tells us his life is much easier these days.

Are you persistent?

Bill monthly. If bills begin to age, include a personal note or letter along with the bill to escalate demand for payment. Follow up by phone with late-paying customers. Commit to a regular billing process, and manage it. Consider hiring a collection agency for any customers over 90 days past due.

As a small business owner, you face many challenges. Billing should not be one of them. Take some time, and do it right.

 


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