Finance is the core component of every business and you can’t afford to mess it up. Many businesses whether small or big, established or start-ups struggle to deal with invoices. As a business owner, invoicing may seem like a straightforward task that doesn’t require your full attention. But it is essential to ensure proper financing.
Ensure that you get the right amount for your goods and services on time, you need to prevent these seven following mistakes. Follow these steps to avoid B2B debt collection.
1. Forget to make invoice
Managing a business is a tedious task. You need to pay attention to every small activity happening in the business. Sometimes, companies forget to do the invoicing and this is one of the severe billing mistakes. There are certain circumstances when business owners don’t send out a bill because they have a verbal contract with the customers, so they assume that the customer will himself pay for the goods and services. But, you should always remember that sending an invoice is still necessary. It acts as a proof and the customers cannot deny paying the bills. Send out an invoice at the end of the project to avoid a silly billing mistake. You can also use credit management software to automate your invoicing and payments.
2. Limiting payment options
From credit cards to cash there are tons of payment methods and each method has its own set of advantages and disadvantages for both the customers and business. Declining to accept a particular payment method may result in limiting your customer base. This is one of the major billing mistakes.
For customer convenience, your business should offer a variety of payment options, typically handled by using billing software. You need to mention details of what payment methods you accept on your website. This allows the customers to have a clear idea about what types of payments you accept and whether it’s feasible for them or not before they start working with you.
3. Unclear payment terms and unspecific details
One of the biggest billing mistakes is the ambiguous payment terms and conditions as it often confuses the customers. Thus, you should always clearly define your payment terms on your bill and make sure your bill is as detailed as possible. You should mention everything in the bill- what exactly are you billing the customer for. You should also mention the due date and the consequences of not paying the bill on time. This will increase your chances of getting paid on time and will improve the efficiency of your business.
4. Not implementing a late payment policy
Regardless of the size of your business or how well established you are, late invoice payment is an ugly experience no one wants to face. To prevent this as a business owner, you have full right to dictate your late payment policy. Whenever a new client approaches you, make sure that you inform him about your payment policy. Give him a friendly warning regarding the consequences of late payments. You have to make sure that your customer understands your credit policy. Have a clear and precise payment policy that leaves no room for questions. Unclear payment policy or not having any late payment policy is one of the biggest billing mistakes that businesses make.
5. Not chasing late payments
Often, you might hesitate in sending payment reminders or legal notices as it may lead to ruining your future with the client. But, this doesn’t mean you won’t follow up on money that is yours. Not chasing late payment is a significant billing mistake. Instead, you should find out the reason for the delay in payment and then sit with the client to come up with a solution. If even after sending emails and calling them, you are not receiving any response, then you can take help of a collection agency to recover the payment for you. Working out a payment plan with your client according to his problem is the best option and it will also result in a better relationship with your clients.
6. Not signing a contract
Setting up an agreement is necessary to increase the odds of getting paid on time and ignoring it is one of the worst billing mistakes. Your contract needs to be well structured, and it should cover a variety of variables as well as expectations. This will provide better legal protection in case your client doesn’t pay an invoice.
7. Not clarifying your charges
One of the worst billing mistakes you are making is by sending an invoice to a client that contains additional fees. You need to explain every charge to your client before starting a project so that they are not surprised or confused when they receive the invoice. You need to provide a detailed and itemized invoice so that the client is aware of each payment. Furthermore, you need to give a clear description of the work and the charges that come with it.
You can’t always blame the customers for the delay in payments. At times, there are several billing mistakes that businesses make which ultimately results in a delay in the payments. So, it is essential to avoid or rectify the billing mistakes mentioned above. These mistakes can be corrected with right steps and with a right approach.
What are 7 billing mistakes you can easily avoid?
- Not making an invoice
- Limiting payment options
- Unclear payment terms
- Late payment policy not set up
- No payment reminders
- Unsigned contract
- Charges are not specific
About the Author
Divyanshu Jangid is a Digital marketing expert with experience in marketing and communications. His interests include researching, reading about new technologies and content marketing. When he’s not working, he enjoys spending time with his family, friends and playing billiards.