Client billing is a fundamental component of every business. It is the reward for your hard work, as well as the last impression you leave with your client. Ensuring that your invoices are professional and complete is critical to your success, which is why this article has gathered the top ten best billing practices in a simple-to-use guide.
Top Ten Best Practices for Client Billing:
1. Always include a date on your invoice
It seems pretty straightforward, but many businesses that manual create invoices using Microsoft Word forget to date their invoices. If you use a client billing software or bookkeeping program, the date should be generated automatically.
2. Always address the person, not the company directly
The address field for an invoice will contain the company name and mailing details, but the invoice itself should directly address the name of the person who approved the purchased. This way the invoice will go to the person that can quickly confirm the charges and approve it for payment.
3. Always use a reference or invoice number
An invoice number is beneficial for tracking invoices, as well tracking your business’s progress. By starting at invoice number one and working your way up, you can celebrate milestones along the way. Invoice numbers will also make it easier to reference which invoices are being paid by a client who has received more than one bill.
4. Always breakdown each charge with a clear description
Your clients should always be able to see exactly what they are buying and how much each aspect of it costs. They may need to reference this information later on and there shouldn’t be any doubt about what they purchased when the review the invoice.
5. Always include the due date and terms by the invoice total
It is your responsibility to provide your client with an easy-to-follow invoice that clearly shows them the amount they need to pay and the day it is due. Keeping those details close together in a clearly defined area (usually the bottom, right hand corner) will give your client a quick reference point when it comes time to pay the bill.
6. Always include information about payment options near the total amount owing
Under the invoice total there should be a sentence or two explaining the various payment methods that are accepted. If you give your client’s online or telephone payment options, it could speed up the payment process.
7. Always include a line similar to “we appreciate your business” on the invoice
Manners count in business. It is usually the simplest things that a business does to show their clients they are appreciated that the clients remember when it comes time to make another purchase.
8. Always email it to the client and request a read receipt
Eliminate the wait time and uncertainty of traditional mail by sending it directly to your client’s inbox and requesting a read receipt once it has been opened. Most client billing software programs have this capability.
9. Always follow-up with a professional reminder notice before it is due
There is nothing wrong with sending a professional and friendly reminder that an invoice is almost due. Your clients are just as busy as you and a reminder might move your invoice to an earlier check run.
10. Always send a thank you note once payment is received
This is the very last chance for you to make a positive and lasting impression on your client. You should thank them for their timely payment, reinforce your previous statement of appreciating their business, and tell them you will be there if they have any further questions or concerns. This polite final touch will remind them of your commitment to customer satisfaction, which will hopefully stick in their minds when it comes time to re-buy.
Unfortunately, most small businesses do not put enough emphasis on their accounting until something has gone terribly wrong. The realization that your bookkeeping has not been kept up-to-date usually happens a few days before taxes are due or even worse, when you notice charges on your bank account for a check bouncing. You can save yourself all of the stress and less minute updating by developing a successful accounting strategy upfront.
The first and most important part of your accounting strategy is to maintain accurate and detailed records at all times. Set yourself up for success by dedicating a specific time each week that you will devote strictly to updating your books. If you use online billing software for your accounting, it should only take 15 to 30 minutes per week to enter all of your transactions. These programs have easy entry blank cells on pre-designed templates, so there is no need for calculations or formatting.
If you need information mid-week, you can quickly enter the last few days’ worth of receipts and all of your reports will be accurate. The next strategy will involve a regular review of these reports, to make sure everything is on track. You should run your cash flow statement, your balance sheet, and your income statement quarterly (or more frequently) to ensure everything is on track. If you use an online billing software program, reports can be quickly run in a matter of minutes, so there is no reason you can’t review them regularly.
You will also be able to generate an account receivable report quickly, which is the next important aspect of your accounting strategy. There will be clients who take longer to pay then the agreed upon terms and it is crucial that you recognize the past due invoices as quickly as possible. Sometimes all it will take is a professional reminder notice to turn that receivable into working capital that you can use to pay your bills. A solid strategy for success involves reviewing your accounts receivable weekly and following up on anything that is past its due date.
The last crucial component to your strategy is planning for major expenses. If you are using all the income your company generates and you are not putting any aside for taxes or emergencies, you are setting yourself up to fail. Make sure you are keeping enough for your taxes in a separate account, as well as an extra 1% to 5% as a safety net. This way you will have the funds if something goes wrong or if there is an opportunity for growth.
Accounting for small businesses does not need to be complicated. If you take the right steps in the beginning, like maintaining your records, reviewing your financial reports, and putting a little extra aside, it will be much easier for you to stay on track.
Bookkeeping is probably not the most exciting part of your day, but it is crucial component of running your own business that cannot be ignored. Whether you hire someone else to do it for you or do it on your own, it needs to be regularly maintained and monitored. In order to make that process a little less daunting, we’ve compiled some quick and easy bookkeeping tips for your small business.
Seven Best Bookkeeping Tips for Small Businesses:
Organization is essential
If you start right from the beginning with an easy-to-follow and organized system, it will be easier for you to maintain and adjust it as your business grows. Research various bookkeeping methods on the internet and find one that makes sense for the size of your business and what you need it to accomplish.
Use an online bookkeeping system
One of the most organized bookkeeping systems you can choose is online billing software. It offers pre-designed templates, auto-fill-in forms, and helpful financial reporting that can make managing your business as simple as logging into a website.
Schedule a set time each week to enter all invoices
Make sure that there is a portion of your weekly agenda designated specifically on managing your finances and updating your records. Depending on the volume of invoices you receive, this should be easily accomplished in 30-90 minutes per week, especially if you are using an online bookkeeping system with quick entry fields and handy drop-down toolbars.
Reconcile bank statements monthly
Even if you regularly review your cash flow statement and your bank statement separately, they should still be double-checked and reconciled. This will help you quickly spot discrepancies if they happen to occur.
Create a separate account for taxes
Separating the taxes you will owe from each receivable as it is paid will put you in a better position when it is time to file your taxes. This way if you end up owing money, you will already have it saved up, hopefully with a surplus that can be invested back into the business.
Review your cash flow statement as often as possible
The cash flow for most small businesses is constantly fluctuating, which means it needs to be regularly monitored. If you are using an online bookkeeping software program, it will be easy to generate and review your cash flow statement from anywhere. This way you can avoid insufficient fund charges by researching financing options in advance and making sure all of your debts are covered.
Review your receivables and follow-up on past due invoices
It is safe to assume that the majority of your clients will pay on time, but you will always encounter a few stragglers who take longer than agreed on. Regularly running an account receivable report will help you catch it sooner, so you can follow-up with a professional reminder.
That is really all it takes to manage your finances! Following these seven simple tips will give you the best bookkeeping system for your small business.
Many people feel that filing their personal taxes can be stressful and frustrating, so the thought of doing it for their business can send them into a sincere panic. In reality, as long as you are prepared in advance, it is really not that scary at all.
Here are a few things you will need to make sure your small business is ready to file taxes:
Keep accurate and up-to-date records
Every small business needs some method of keeping track of the finances throughout the year. Whether you use a manual system, desktop accounting program, or an online invoicing application, there should be detailed and current records of all of your expenses and income. An automated bookkeeping system will work best, since it usually includes all of the financial reports that you will need for tax season. If you enter any new receipts into the system every week, it will take almost no time to print the yearly totals when it comes time to file.
Understand your deductions
Business deductions include everything it costs you to run your business. Office supplies, furniture, travel expenses, and utilities are pretty straightforward deductions, but there are others that you should consider. Do you use your vehicle for work? If so, you can deduct mileage, parking fees, and tolls. Do you have a business loan? If you do, you can deduct the interest. The same can be done if you have a bad debt or credit cards. Whatever it takes to keep your business running smoothly should qualify as a deduction.
Understand tax credits
Make sure to research the various tax credits that are available. The Small Business Jobs Act of 2010 has over seventeen tax provisions that can decrease the tax burdens for small businesses. There are also tax credits within the Affordable Care Act. These tax credits allow small businesses to cover up to 35% of the premiums they pay to cover their employee’s health benefits. If you bring your paperwork to a tax professional to file on your behalf, they will be able to tell you exactly which credits will apply to your business.
Keep personal and business expenses separate
There could be times where you need to dip into your business account for personal reasons or vice versa. This will create confusion at tax time and it will make it more difficult to determine exactly how much your business has made. If you need to bounce back and forth between accounts, keep a detailed record, and bring everything back to even before it is time to file taxes.
Tax season is not fun. There is nothing you can do in advance to make it a joyful experience, but that doesn’t mean it should be a painful one. As long as your records are updated and organized, you understand your deductions and tax credits, and you have kept your business finances separate from your personal finances, there should be no stress or confusion when it comes time to file.
If you are someone who does not like math, don’t let that stop you from handling your business’s accounting. Most modern accounting programs, especially ones from online providers, will do all the calculations for you. All you need to do is enter the amount for the invoice and it will not only calculate that invoice, it will also update all of your critical financial reports.
All you need to do is understand the basic terminology of accounting so you know what everything means. It is important that you regularly review your financial report, both so you get accustom to interpreting them, and so you can identify trends or problems.
There are three major reports you will need to understand and monitor:
Cash Flow Statement
A cash flow statement is the financial report that demonstrates the sources of a company’s cash and how that cash was used over a period of time. This is useful for determining the short-term viability of a company, especially in regards to its ability to manage its expenses. Since the management of cash flow is absolutely necessary for small businesses and it is recommended that an entrepreneur studies their cash flow statement at least once per quarter.
The balance sheet is divided into two parts (liabilities and shareholder’s equity) that must equal each other, or balance each other out. The main formula behind a balance sheet is: Liabilities + Shareholder’s Equity = Assets.
This means the assets (means used to operate the company) are balanced by the company’s financial obligations, accompanied by the equity investment that is brought into the company plus its retained earnings. Essentially, the balance sheet is a quick overview of the company’s financial position at a single point in time.
An income statement (also known as a profit and loss statement) is a summary of a businesses’ profit or loss during any specified period of time. The income statement records all revenues for a business during this given period, as well as the operating expenses for the business to determine whether a profit or loss was achieved.
Regularly monitoring of these three financial reports will give you a clear picture of how your business is doing and whether or not there are opportunities for growth. The meaning behind the figures on these statements can be improved, by cutting back on expenses, and looking for affordable methods of attracting new business. In reality, that is the most basic accounting principle all business owners must understand. There are always ways to increase your income and reduce your costs, but you need to be actively searching for them.
One example of reducing your expenses would be handling your own bookkeeping. It will help you gain a better understanding of your finances, plus you will save money on paying someone else to do it. If you use online accounting software, it will be a matter of basic data entry. Definitely something you can easily squeeze into your day. The more involved you get in your accounting process, the more sense it will make and the better you will be able to use the information to benefit your business.
The world of business is shifting away from the traditional office space, since more people are making the decision to work from home. Many companies are now hiring home based people to do their marketing, accounting, customer support, and IT. There are freelance websites for individuals who want to start their own business, as well as businesses who strictly hire home based employees. There seems to be an option available for almost every skill set or industry.
The benefits of working from home are priceless and they are hard to resist when the opportunity presents itself. A flexible schedule, no commute, more quality time with your family, and less stress are convincing people to change their focus to something that can give them a better work/life balance. Employees are even willing to make less money for the luxury of working inside of their home.
The internet is creating more home based employees, which seems to be benefiting everyone. Not only are the employees happy that they get to work at-home, the companies benefit because if gives them to option to hire temporary professionals on a part time basis instead of investing in a full time employee’s salary plus benefits. Businesses who are trying to reduce costs in these tough financial times are choosing freelancers at a lower rate without sacrificing on the quality of service. They also will not need to purchase any office space for that employee, which will save them even more money.
Businesses can now also manage their marketing and bookkeeping online, so it can be done from anyone’s home on a part time basis. The internet has transformed these ordinary tasks into efficient systems that can be accessed from anywhere. There are companies online where you can create an invoice, email invoice to the client, and have your account receivable list updated with the new amount all in a matter of minutes.
In many companies, existing employees can choose to work from home at a reduced salary, instead of paying the expense of commuting. They can instantly stay in touch with the main office by using phone, fax, and email. They can also use an online file sharing program, so everyone has access to the same information, regardless of their location. The impressive quality of video conferencing allows teams to brainstorm and meet from anywhere, so there is no need to be in the same room to collaborate on a project. Most companies appreciate the cost savings and will gladly allow someone to work from home, as long as their productivity does not suffer.
The surge of mobile device use is only going to fuel the work-from-home fire. It won’t be long before traditional commercial space becomes an ancient thing of the past. The joy of being able to work while lounging in the sun with a laptop is too tempting for most people to turn down. Now that the internet has given everyone the ability to stay connected from anywhere, there is no reason to drive to the office, just to get work done.
More and more traditional business practices are being shifted from the physical world to the online world due to the internet’s vast capabilities. Business owners are quickly discovering that they can save both time and money by taking advantage of everything the internet has to offer.
Here are several effective ways you can use the internet to manage your business:
Research and source your products and services online
Google is the superpower of the internet. It holds the answers to almost every business question or need imaginable. People are constantly using it to research purchases for their home or personal life, so there should be no surprise that it is also a valuable tool for businesses. There is no need to limit your resources to local office supply stores or part suppliers, where the global market is only a click of the mouse away. You can even use the internet to sources home-based employees or freelancers, to cut back on labor expenses.
Paying bills online
There is no need to make a weekly trip to the bank to pay your company’s phone, utility, and credit card bills. Almost every modern business has the option for you to make online payments. This convenience will save your business both time and money.
Sending invoices online
Why waste paper, an envelope, a stamp, and 5-7 business days sending your invoices using traditional mail when you could send them by email? If you use a web-based invoicing software, you can even create the invoice online and then email it to the client all within a matter of minutes. A company can even arrange it so their clients can make payments to them online using Google Wallet or PayPal. It will cost you a small percentage of the payment, but it will offer your client’s a valuable added convenience that could result in earlier payment.
Reviewing your financial statements online
A company can now even manage on of their finances using the internet. There are web-based invoicing providers that can give you everything you need to create and email invoices, record a payment, manage your cash flow, and monitor all of your critical financial reports. This way you have the ability to review the information you need even when you are not at the office.
Marketing your business online
There are so many different methods for marketing your business online. Most big businesses have quickly learned the power that social media and marketing automation has to generate new customers. It is no longer enough to simply have a stagnant website promoting your company. Businesses need to actively promote themselves and connect with consumers via the internet.
The internet can be a powerful tool to manage your business, if you use it for research, bill payments, invoicing, managing your finances, and marketing. The more time you spend online, the more ways you will find to save your company time and money.
Is Handling Your Finances Online Safe?
Handling your finances online is as safe as any other method. Identity theft happens just as often with bills that are sent using traditional mail, public purchases, and ATM withdraws, as it does online. Handling your finances online allows you to check account balances, transfer funds, make deposits, make payments, and review important financial reports from the comfort of your office, home, or mobile device. This helps users save time, since they never need to physically make as trip to the bank.
Almost every major bank allows you to manage your banking online. Most of the well-known banks are even introducing useful mobile apps for your smartphones that can make it even more convenient. When you choose to bank online, you will have access to your accounts all of the time, not just during banking hours. You can also achieve this same benefit for your business by using a customer invoicing application or an online accounting provider.
Here are just a few ways you can handle your finances online:
- Verifying your transactions and check your account balance
- Transfer funds from one account to another
- Set up account update alerts for text or email messaging
- Pay your bills online
- Make deposits using innovative smartphone apps
- Manage your bookkeeping using an online customer billing application
- Create and email invoices using online invoicing software
Make sure that you only use secured computers and mobile devices to conduct your sensitive banking transactions, and never click a random link that has been emailed to you from an unfamiliar source. Login into the application or type in the address yourself. When you are finished with your banking or billing, be sure to completely log out of the program.
Is all of our online information really safe?
Unfortunately, there is nothing that is completely safe anymore, but there are precautions you can make that will ensure that your online financial management activities are as safe as they can be, possibly even safer than using an ATM. It starts by being aware, vigilant, and precautionary.
Here are some steps to protect your information:
- Only use websites that you have personally confirmed are secure and reliable. Look for the lock icon and/or a web address that begins with “https://” (the “s” stands for secure). This is not a guarantee, but it is a good indication that it is a secure site.
- Use unique passwords that contain at least eight characters, combining letters, numbers, and symbols. You should really choose a different password for every account, and never use the same password for financial accounts that you use to unlock your computer. Hackers can quickly obtain your computer’s password and then use it log into all of your accounts.
- Change your passwords frequently and don’t ask sites to remember your password for you.
- When you’re finished using any financial site, make sure to log out of the account.
- Keep your computer secure with an internet security software program. I have attached a link to an article that covers many of the more popular options, Best Internet Security – Top 10 for 2013
- Never reply to emails or pop-up windows that ask you to update your security information. Your bank, credit card, or investment firm would never ask you to do that.
- Always keep in mind that any offer that appears to be too good to be true probably is.
As long as you do everything you reasonably can to secure your computer and financial information safe, the benefits of managing your finances online will outweigh any of your safety concerns. The cost and time savings alone makes it worth it, especially since it is actually easier for someone to swipe your mail than it is for them to get into your financial accounts.
There are so many benefits when it comes to trading in your old accounting software for free online invoicing. The old program was strictly tied to one desktop on one stationary computer that needed to be back up with both electronic copies and hard copies. It took time to sort through all the information to find what you needed when it really mattered.
Everything neatly organized in one place that can be accessible from anywhere!
Handling your invoicing online is so much more flexible and convenient. It is accessible from any computer with internet service. It will also be immediately updated the moment a new invoice is entered, so you can trust you are always viewing the most current data.
Helps the environment by making printing optional
Free online invoicing is also faster, more cost efficient, plus it reduces paper costs. Even more modern accounting software developed within the last decade still requires that you print several copies of every invoice you enter. You would need at least one for your records (usually two), plus a copy that would be mailed to the client. Online invoicing eliminates the need for these copies. You don’t even need to print copies of essential monthly and quarterly reports, since they can be easily referenced using the computer screen.
Free online invoicing allows you to manage your finances directly from any computer that is hooked up to the internet, so the need for printing hardcopies is completely optional. Invoices can be entered into the system and then emailed in minutes without ever having to hit print. They also usually have the ability to send reminder notices or thank you notices directly to the client’s inbox, furthering reducing the need for paper copies.
Saves time since everything is quick and convenient
These invoicing programs also save all of your information online, so any invoice or report can be instantly accessed whenever it is needed. You won’t even need to keep physical copies in your files, since you can quickly reference the electronic copies using your computer screen. This is one of the reason it is such a convenient and environmental friendly way to manage your finances.
These free invoicing billing software programs also save you time since the entry process only involves selecting from toolbars and entering prices. Once the initial setup is done (entering client/vendor information and product details), all you need to do is selecting their name and enter the prices. All of the formatting and calculations will be done automatically.
If you choose to go with the free basic package, you are also saving money since you won’t have to pay a bookkeeper to manage your finances. Doing the entry yourself won’t take a significant amount of time and then you will only need to budget for an accountant at tax time.
Free online invoicing is a great way to give your business a competitive advantage in today’s tough economy. It will help you save time, money, and even the environment. Those are three things your company should be striving to do anyways.
In reality, there is nothing simple about managing a business. It takes time, commitment, and determination to be successful. However, there are online tools available that can make it easier to stay organized and in control of your company. The internet has revolutionized the way people do business by developing convenient and efficient solutions that you can afford to pass on.
Your physical location is no longer relevant when it comes to doing business. Due to email, video conferencing, online filing sharing, and countless other feats of new technology, people can connect and conduct business without having to be in the same room. All you need is a computer or mobile device with an internet connection.
Every modern business should have a professional looking website that is easy for their customers to navigate. You can easily manage and promote your business online using an interactive and helpful website. Start a blog, post product demo videos, or use it to promote special offers. This will also give customers a place to view your products and services prior to contacting you directly. If you use marketing automation software, you can even capture these visitors and nurture them to improve their chance of committing to a purchase.
Use Online Accounting Software
Another new tool that can help you manage your business is online accounting software. Rather than purchasing a bookkeeping software program that is tied to one computer (one location), or rely on manual entry and formatting using Microsoft Word and Excel, online accounting software gives you total flexibility and ease of use. The billing software allows you to store all of your customer information online, so it can be accessed from anywhere with internet access.
Make Your Files Accessible from Anywhere
Your finances are not the only thing that can be made more convenient online. There is also online file sharing programs, where you can access your files from anywhere. This way you can work on a file at home without having to first email it to yourself. You can also share files with colleagues who do not work out of the same location.
Market Your Business Using Social Media
Another way to manage your business online is through the power of social marketing. Every modern business needs a Facebook page, Twitter account, and LinkedIn profile to promote their products or services to the global market. They also need followers. If you are not sure how to get people to pay attention to your social media sites, check out this article, How to Get More Facebook Likes, Twitter Followers & Social Friends.
The more online tools you implement, the simpler your entire process will become. Managing your business online only takes a quality website, a good online invoicing provider, file sharing program, and a powerful social media presence.