Tune Up Billing and Collection Processes for Improved Cash Flow

Timely and accurate billing, along with efficient collection strategies, not only ensure a steady cash flow but also contribute to building strong relationships with clients. Let’s look at some best practices to optimize billing and collection processes.

Bill Quickly:  The best opportunity to collect is when your service (or product) is fresh in your customer’s mind. Set a monthly goal for getting invoices out and hold yourself and others accountable. Meeting that deadline has to be a top priority, even in the busiest times.

Clear and Transparent Invoicing: Begin with creating clear invoices. Does the invoice clearly state when payment is due and who to contact for questions or additional information? 

Establish Payment Terms Upfront: Clearly communicate your payment terms to clients before any work commences, including outlining due dates, accepted payment methods, and any penalties for late payments.

Offer Multiple Payment Options: Cater to your client’s preferences by offering various payment methods such as credit cards, electronic fund transfers, and checks. This convenience can accelerate the payment process and lead to quicker collections.

Invoice Delivery is Important: The best practice is electronically delivering invoices to a specific individual. This saves postage and is faster than mailing. Lessons learned from COVID – mail may be delayed, or the responsible person may be working out of the office but have access to email. 

Implement a Systematic Collection Process: Set up a system to follow up on overdue invoices. Establish a clear collections policy that outlines the steps you will take if an invoice remains unpaid beyond a certain period. Assign someone to be responsible.

Customer Relationship Building: Viewing the billing and collection process as an extension of customer service can lead to stronger client relationships. Engage with clients, address their concerns, and work collaboratively to find solutions to payment challenges.

Lastly, if you have issues with a particular customer, make certain the issue is not dissatisfaction with goods or services rendered. If that’s the case, the customer may feel they have a legitimate excuse to pay late.

Never be bashful about asking for your money. Being on top of collections and contacting the customer in a positive manner reflects professionalism. It’s another way to demonstrate your company’s competency to the customer.