Take the pain out of invoicing
Ask FSB’s tips for simplifying your payment processing.
Freddie Bates, Springfield, Ill.
Where can I find a template to help me create an invoice for payment, and can you recommend any tips on how to make processing accounts payable or invoicing for services any easier?
By Brandi Stewart, Fortune Small Business staff writer
Dear Freddie: There’s plenty of help out there; it all depends how much of the work you want to delegate, and how much you can afford to farm out. When it comes to getting help with your accounting, you get what you pay for.
If you can do it all yourself, begin by creating a format for your invoicing. Carolyn Walter, an office manager at Time Inc. (part of Time Warner, CNNMoney.com’s parent company) who also self-manages her acting career, recommends starting with the invoice template in Microsoft (MSFT) Word. “It’s a basic outline that can work for very small businesses across different industries,” she says – and it’s free.
Internet accounting services are inexpensive and easy to use. For example, Blinksale.com offers an invoicing service that allows users to create, send, and catalogue payment forms in a Web-based format. Depending on how many invoices you send a month, the service can cost between $0 and $49 a month.
The Internet is a great place to find inexpensive software specifically designed to help entrepreneurs. You can look for a program that not only whips up invoices, but also manages other bookkeeping tasks, such as automatic billing, budgeting, and expense tracking. FSB’s tech expert Jonathan Blum recommends both Intuit’s QuickBooks (INTU) and Microsoft Office Accounting Express 2008.
Last year, FSB reported on a company in search of a program that could track functions such as purchasing and invoicing as well as employee spending. ( See “A speedier way to file expense accounts.”) The executives at Baker Communications found what they were looking for in ExpenseWatch, which offers a product that specializes in invoice management.
For business owners who don’t have the time or staff to manage their company’s payment processing in-house, outsourcing is an alternative.
“Delegating business processes, such as aspects of finance and accounting, including invoicing or payroll, can be a smart move for entrepreneurs looking to focus their resources on their core business,” says Mindy Blodgett, a research analyst for Boston-based technology consulting firm Yankee Group. ADP (ADP)and Accenture (ACN) are examples of large outsourcers that work with small and medium size businesses.
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Cass Information Systems is the way to go if you have a ton of customers.
The best way is to use your personal accountant. He can work even P/T for you. But if you can’t afford it, so go for Paychecks. This is the known company and they will do a good job for you.
I would recommend ADP or Paychecks. They both are good companies, with a good service.
In contrast, we use Paychecks already over 6 years and we like it. It has a good service, affordable fees, and they do welltheir job.
We use the PayChex and I like it. It is affordable, Quick, and easy.
Once you get your invoice forms made and you start sending them off, you are going to have another issue to handle: Past due invoices.
Here’s some advice from an article published by the executive coaching company Vistage. The expert advice comes from Abe “Walking Bear” Sanchez, President of A/R Management Group, a credit and collections consultant. According to Sanchez, past due customers fit in three categories.
Slow payers are good, stable customers who have the ability to pay, but they pay slowly as a means of practicing cash management. In essence, they use you as a means of short-term financing. "The strategy with slow payers is simple — call early and call often," says Sanchez. "Become the squeaky wheel that firmly and politely ask for payment. Do your best to keep them current.”
Problem payers have either systems or financial problems. Systems problems involve some glitch in the process that prevents the customer from paying on time.
“As soon as you discover a system problem, track it down and fix it immediately,” says Sanchez. “If you let it build for a long time, it can take a lot of reconciliation to collect your money." Become a detective. Dig up all the facts and fix problems immediately.
For client’s with minor financial problems, express a willingness to work together while selling them on the benefits of continuing to buy from you. Clients with serious financial issues should be cut off at once. If you continue to do business, put them on C.O.D. only.
Avoidance payers are customers who deliberately try to avoid payment. They enjoy beating others out of their money. They refuse to cooperate and won’t return phone calls. They lie and blame the problem on your systems. They break arrangements and skip out on you.
Fortunately, avoidance payers represent the smallest percentage of unpaid collectibles, usually less than one percent of total receivables. Yet, most companies adopt an "enforcement of payment" mindset and spend far too much time and energy chasing this small category. Identify this group as early as possible and cut them off immediately to limit your loss. Then put them in the hands of a third-party collections professional.
What to say when you call
In collections, the decision maker is the person who can tell you when you will get paid and why. Often, the person who cuts the check doesn’t make that decision. To find out why payment has been delayed, get to the person who decides when payment goes out. Start the conversation by saying, "Hello. I’m Joe Smith from ABC Company. Our records show that invoice #123 dated January 1 is still open. Can you help me with this matter?"
Ask questions and listen closely to what the customer tells you. Use the conversation as an opportunity to make sure your information is up-to-date. Pay attention to how much the customer cooperates or resists. If they withhold information, you may have an avoidance payer on your hands. Get a firm commitment from the customer on when they will pay you and use a contact management system to follow up.
Other Collections Tips
To improve your collections efforts, Sanchez recommends the following:
Start early. Contact all delinquent accounts within three to five days of becoming overdue. Waiting 60 or 90 days has a strong negative impact on cash flow. Plus, banks will not lend money against those receivables.
Call the largest accounts first. Don’t call delinquent accounts in alphabetical order. Go after the customers that owe you the most, first.
Keep a log to track your systems problems. This also allows you to constantly upgrade your business processes and become more efficient.
Call at the right time. The best time to call commercial accounts is on Monday morning. Start calling personal customers on Thursday and go through Friday, when people usually get paid.
Get the right person for the job. Use outgoing people who enjoy interacting with others and talking on the phone to make collections calls.
When you have effective collections you improve your cash flow and build stronger relationships with your customers.
I would use ADP over Paychecks. I had a bad experience with Paychecks. I use ADP now and they are good.
My company has 29 employees and we have used the payroll company ADP for 6 years now. I strongly recommed it.
Our 3-person operation uses a program called MyInvoices & Estimates. We use it only for invoicing and it works perfectly for our needs. You can easily track what’s been paid and what hasn’t. It gives you the ability to personalize your invoice as well.
Intuit also has a great free online invoicing product called Billing Manager. Full Disclosure – I work for Intuit.
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Maybe consider an ECM solution. This will automate and store all of your accounts. It sill also link information from one departmant to another. It also solves you document retention needs. No more storage of paperwork and all of the information is accessable. I’ve seen a unlimited seat, hosted ECM solution for an affordable $325 per month.