One of the things I have noticed is that I am invoicing less and less these days. With new mobile payment systems, I have been able to increase the speed at which I get paid without having to submit traditional invoices. As an avid QuickBooks user, I used to provide invoices to my clients on a regular basis. But I have realized that over the past two years, I have not submitted as many invoices. At first glance I was not sure why that was the case. I went back and took a look at my receivable and realized an interesting trend.
Invoices don’t get paid.
I realized that I have a lot of outstanding invoices. These invoices are accumulated over time and are not indicative of anything in particular, except that I realized it created an “I’ll get to it later” attitude with my clients. I have never used a paper quoting system, but that was beginning to happen with my invoices. Clients would call, we discussed price, and I would send an invoice and wait for payments to arrive. Weeks, months or years later the invoices would not be paid. So I stopped sending them unless specifically asked.
Create pay now policies.
As a service provider I took a product payment model stance. I will give you a receipt for payment. I did not consciously move into this direction, but it naturally progressed. I started using a contract with an immediate way to pay. This worked better and customers paid quickly if not immediately. Mobile payment systems helped tremendously and allowed me to charge for services in full as opposed to creating a payment system.
Provide receipts and document
As a service provider, clients want to know what their money is being used for. If it is a flat rate, I provide receipts for service and documents when it is completed. If it is an hourly service, I provide Trust Statements that show how and when the money has been utilized. That is the typical standard practice. I also provide updated invoices to show when services were completed to ensure customer satisfaction.
Track for tax purposes.
Since I rarely use invoices and quoting systems documentation of income sources is much more significant. That is why I rely heavily on my banking institution which allows me to track incoming funds. The use of online banking that allows me to access 12 months (or more) of deposits is extremely helpful. Notations on checks, credit card payments and transfers help to track who paid and when. At the end of each year, I go back through my accounts to ensure that everything has been properly tracked and accounted for.
Have a final destination.
One problem with having multiple payment systems is that you can easily have the money go in different directions and it could be very difficult to track. Therefore, it is important to have one bank account that receives all of the transactions. Even if that account is not your “operating account,” you need to know when and where your money is being deposited. This will allow you to track customer payments without having to search through all the various payment portals and keep an accurate track of payments made.
Shahara Wright is an experienced and highly sought after business law attorney and business strategist. She is the author of From Entrepreneur to CEO and host of the CEO Collaboration Circle. Shahara founded The CEO Effect, LLC to work with small business owners who want to implement strategy to build capacity.