One of the main reasons that small businesses fail is undercapitalization. That means that in business, cash flow is like a lifeblood. You have to have it in order to survive. According to a US Bank study, 82% of business failures are caused by a lack of resources or mismanagement of them. Not only can a lack of capitalization limit business growth in key areas like inventory expansion, equipment resourcing, and employee development, it can kill a business faster than a natural disaster. Nothing shuts down business flow like a negative bank balance.
Strengthening processes throughout an organization can help especially when it comes to how finances are handled within the business. One of the key areas that tends to create or sustain problems in undercapitalization includes the billing process. Having a high standard of accounting when generating invoices for customers is a must for any successful business. A full strategy and implementation of operational accounting should be developed before you even build the first product or offer the first service.
When a business provides services or goods without requiring full payment either in advance, upfront, or upon services rendered, the unpaid money is considered to be accounts receivable or AR. The process of billing in AR generally includes invoicing, statements, and collection. The first step would be preparing an invoice to a specific customer for a specific item at a specific price. There would also be an assignment of invoice and product codes, along with the agreed-upon pricing. Other information would include the name of the client and any personal data including the mailing address and phone number, the expected date to be paid, and any explanation of credit terms, along with remittance information.
After that, there would be a process for sending the invoice. All throughout the process, there would be a process for tracking the invoice that would include how to send statements, collect payments, and a process for pursuing unpaid invoice balances. Any business that extends credit by way of not collecting for services rendered at the time of rendering will have to implement a streamlined AR system of billing, especially when payments are ongoing or repeated over time. One-time-only invoices are easier to track and do not usually require the follow-up that ongoing payments will generate.
There are some common obstacles to having a successful billing flow in any business. With attention to detail and a little organization, the more usual pitfalls can be avoided. In any case, tightening up processes and procedures in the accounts receivable area of your business can help your finances more than any other concentration. From developing a strategy to invoicing regularly and correctly, the process of billing can be improved by strengthening in a few core places.
Develop a Strategy:
No matter what kind of accounting system you are using, be it online or with a service or program, you should choose a system that works or makes sense for you. Whether you choose to use spreadsheet computer programs or old-fashioned ledgers and handwritten invoices with duplicates and triplicates, it is important to have a system that is implemented and followed fully by everyone in the accounting department. Whether you are a small retail store or a large bank or medical office, following a system is a must for the achievement of business success of any kind.
Thankfully there are so many kinds of ways to partner with services for these kinds of aspects of running a business that there is almost no need to have full-time employees to handle some things surrounding billing. From accounting software to invoice preparation and mailing services, there is really no reason for you to have to handle these things in-house. Your strategy can be the framework that makes sure you get paid on time and keep the lifeblood flowing.
Invoices On-Time and Regularly:
No matter when you decide you are sending invoices (day and time of the month), statements, and past-due notices, do it every time at the same time of the month always. Though the hustle and bustle of your business from day to day can keep you from the desk and bookwork that piles up, making sure to prepare and send invoices at the same time each time sets a precedent with your customers. It indicates to them that you are reliable, stable, and organized thus inspiring them to make timely payments in return.
Using an automated or online system for your billing will help eliminate the guesswork in sending invoices. Outsourcing your invoice printing and mailing is one of the ways to streamline your processes to ensure fast, reliable invoicing all the time. Reliable invoicing leads to reliable payments, which keeps your income steady and decreases liability. If you partner with a 3rd party specialist for this service, make sure you send them your files on time each month so that they can get the invoices sent and tracked.
Following a system and strategy can keep costly errors from plaguing your business accounting systems. Just having a protocol or process that you follow can ensure that invoices are correct every time. When it comes to people and money, it is of utmost importance to be exact.
Errors in either debit or credit can erode customer trust in your integrity and money management ability. Errors in even name, address, or contact info can cost valuable time in returned mail or unreceived bills. Errors in invoice or account numbers can lead to money being credited to the wrong account or payments getting lost in the system. With all the online and automated assistance available today to help keep you on-track sending correct and updated invoices, there is really no excuse for too many errors in this area.
Have a process for handling overdue or unpaid invoices consistently and completely. Be prepared to be lenient as called for if you have the flexibility and the case warrants it. As a member of the community, you have to be prepared to work with a customer that has been hit hard by financial disasters, or is down on luck, or has a health crisis in the immediate family. Compassion at the right time goes a long way in this world, so do not be afraid to exercise it when you can.
However, by having good billing procedures and processes to be followed, you will be able to check and know if you are able to extend help to those in need by being on top of your finances in general. Make sure that your process for handling unpaid invoices does not become a time resource absorber for you. The surest way to lose money is to spend personal time tracking it down, making long phone calls, reading long emails, or having to visit a customer in-person to collect.
Trust in the Experts
Time is always of the essence when it comes to business, so having a process upfront that is in place to handle billing is of paramount importance. With so many opportunities to partner with like-minded 3rd party businesses, you can outsource the business services that are the most time-consuming for you. There is almost no reason to have a huge accounting department anymore when you work with a printing and mailing specialist like Towne Mailer.
Having over 20 years of experience providing specialty printing and mailing solutions for clients all over the country, we know how important proper billing can be for your success. We’ve spent two decades partnering with customers like you that need reliable, professional, bill printing and mailing services. From the most elegant and attractive printing quality to the fastest 24-hour guaranteed turnaround, you can count on Towne Mailer to get the job done fast, correctly, and seamlessly every time. We are the printing and mailing support you need to fill the bill!