As a freelancer, your time is split up into billable and non-billable hours. How you choose to spend your time outside of billable hours is critical to profitability. That’s why proper invoice management is so important—using invoicing best practices can help reduce your time spent on non-billable tasks. Meanwhile, that precious time can be re-invested into actually billable work—like designing a website.
Nobody wants to lose money, right? You won’t if you can get your invoice management techniques in check! Here’s how:
Tip #1: Automate for Speed and Accuracy
The truth is, truly small businesses have a ton to gain from automation—particularly when it comes to invoice management. Invoicing isn’t just a process, it’s a form of art. And if you can master the art of invoicing, your cash flow will thank you for it.
What is automation? The technique of making a process or a system operate automatically, thus reducing human intervention.
Paper invoices are a hassle to track for both ends. Not only are they time-consuming for you to produce (and store), but they can so easily get lost on your client’s end, as well as your own. After all, both of you are busy with lots of things on the go!
With invoicing tools that leverage automation, you essentially eliminate many manual aspects of invoicing, like:
- Copying and pasting an old invoice → to remove old details and insert new ones
- Entering line item and client/recipient content details each time you invoice
- Scouring through old invoices to find a specific invoice
- Following up with an email to remind your clients to pay
- Entering and calculating sales tax and totals
- And much more
Tip #2: Set-up a Payment Schedule That’s Benefit to Your Cash Flow
Boosting cash flow is all about setting up the right timing for invoice payments. If you tend to work on larger projects, you might want to ask your client to pay you in a series of partial payments, rather than waiting for one final payment at completion. Another invoice management technique is to ask for 50 percent payment up-front, then the rest at completion.
If you’re a freelancer with multiple ongoing projects at once, try to set up billing at a reasonable interval, like bi-monthly or monthly. Establishing the timing of invoice and payment will help your client familiarize with your preferred invoicing schedule. After all, no one likes payment surprises! For example, if you tend to invoice on the 1st of each month and expect payment in 15 days for that month’s services, communicate it to your client and keep to that schedule each month.
If you can get a retainer with your client, then even better.
Tip #3: Get on a Retainer, if possible
A healthy cash flow is a healthy business. It’s as simple as that. By signing a retainer gig, you’re essentially creating a recurring income stream—making life a whole lot less stressful during leaner months or if your business has seasonal dips in revenue.
A retainer agreement is made between you (the business owner or supplier) and your client. The agreement guarantees that you’ll receive X amount of hours per a given timeframe.
Tip: If a retainer is the direction you’re headed, make sure that your payment terms are all agreed upon between you and the client and if possible, available in writing.
Tip #4: Get To Know Your Accounts Receivables
Once you operate with a system that you trust, it’s time to monitor it for added benefits. A huge part of successful invoicing isn’t just setting up the foundations—it’s monitoring it constantly to keep cash flow as healthy as possible. By going digital with invoicing, you essentially centralize every invoice you’ve ever sent in a single place. A centralized hub breeds the perfect place for tracking, monitoring, and most importantly, optimizing.
Invoicing apps like TrulySmall™ Invoices for example, lives on your mobile (iOS or Android) and on a web app. That means you can monitor the status of your invoices all in one system.
Have a late invoice? You’ll see it right away. Not sure if your invoice was seen by your client? TrulySmall™ sends an automated email to you confirming that it’s been sent and another once it’s been opened by your client. The best part? The system also sends a reminder to pay two days after your invoice has been sent.
Relevant: Accounts Receivable: How to Optimize it for Small Business Growth
Invoice management the right away – start today
Thanks to automation, technology, and invoicing best practices, you CAN find ways to keep your hard-earned money in your pocket. Whether that’s leveraging invoicing tools, putting more thought into your payment schedule, setting up expectations early, or being more in tune with your accounts receivable, try it today.
Looking to boost your invoice management with the right tools and guidance? If so, test out TrulySmall’s free invoice templates or try TrulySmall™ Invoices today!