Why do so many SMBs struggle with invoicing?

04.04.24 16:52 By Marques Barcellos

How to Improve Your SMB's Invoicing Process in 4 Steps

To get paid is one of the most essential functions of any enterprise. There is no point in marketing and promoting a service, bringing the sale throughout the funnel, and delivering the service for not getting your well-deserved payment. Although it sounds too obvious, many small businesses don't get rightly paid due to poor invoicing processes.

  

I have witnessed SMBs get unpaid in diverse situations due to weak receivable management. So why do so many SMBs get invoicing wrong? It can originate from various factors, such as inadequate systems, poor record-keeping, and failure to follow up.

  

Keeping up with the various activities involved in being a small business owner or a solopreneur is not trivial. Therefore, it's perfectly understandable to be proficient in some aspects and lack performance in others. Let's look at a few initiatives for enhancing the invoicing process.  


Enhance Your Invoicing Process and Improve Cash Flow


1) Digitalize your invoicing process. If you rely on manual or outdated software, get modern invoicing software instead—Quickbooks, Xero, Square, Zoho, or anyone else. Whatever works best for you will streamline your invoicing procedure, increase productivity, and save valuable time.

  

For example, my other business, Swiss Sports Travel, offers airport and ski transfers to the Alps. It uses Zoho Books, which enables me to invoice anywhere with a smartphone. As more data is added, such as client details, service descriptions, and prices, sending Stripe-integrated invoices gets easier. Moreover, it shares a payment link via e-mail, WhatsApp, and text, facilitating customers to take action.

  

As payments roll in, I receive a notification informing me that a client has just paid. It also automatically updates all financial records, enabling me to access updated information like cash flow and overdue invoices quickly.

  

Send invoices promptly after you conclude a sale or as soon as the work is done, depending on the financial arrangement with your customer. Forgetting or delaying the task can result in setbacks in your payments. 

Improve Your  Invoicing Process in 4 Steps
Enhance Your Invoicing Process and Improve Cash Flow

2) Improve Record-Keeping. Maintaining accurate records avoids discrepancies between what was delivered and invoiced. Divergencies on invoices, such as incorrect service descriptions, quantities, or prices, can lead to client confusion and disputes.

 

Use a CRM software to record interactions during and after the selling process. Prepare a proforma invoice detailing the services you are selling, prices, and payment terms. Register all the appointments and related information on a calendar app. Keep track of all services booked and delivered. 

 

If your business offers an ongoing service, I encourage you to organize your SMB's work around project management. By planning the resources and activities under a specific scope, budget, and schedule, you can efficiently improve your service's record-keeping, tracking, and invoice as you provide it.


Professional Communication and Follow-Up


3) Effective communication. Inadequate client communication can lead to misunderstandings regarding service expectations and billing details. Describing your services, what is included in the price, and the payment conditions is essential to ensure clarity and transparency.

 

Although it's not directly related to the invoicing process, the more precise your service description and terms and conditions are, the less likely you are to have invoice disputes. An invoice dispute means wasting time on non-income-generating activities and can lead to unpaid invoices.

 

4) Proactively follow up on overdue invoices. Managing various aspects of your business can be overwhelming. However, neglecting to follow up on outstanding invoices can be a big mistake, as receiving overdue payments is a quick way to get money. You already concluded the selling process, and, in many cases, the service has already been delivered. Therefore, it's worth sparing some time to confirm clients' payment plans.

 

Using invoicing software simplifies payment tracking and facilitates prompt contact with overdue customers. Payment reminders can be automated; some software even consolidates bank statements automatically, saving big time.

 

Although issuing invoices and tracking payments can be challenging, invoicing correctly and promptly keeps your business financially healthy, boosts its branding, and maintains consistent cash flow. Enhancing your invoicing process is vital as your business scales.

 

Disclosure: I have no sponsorship from Zoho, and apart from Swiss Sports Travel, I have no interest whatsoever in any brand mentioned in this text.

Marques Barcellos