written on March 01, 2011 by John Doucette
Related Items
- Invoicing Practices and Collection Effectiveness
-
written on December 01, 2011
by John Doucette
- Benchmarking Collection Performance
-
written on September 27, 2011
by John Doucette
- Prioritizing Collection Activity - You Can't Call Them All
-
written on June 06, 2011
by John Doucette
- The Cost of Extending Credit
-
written on April 21, 2011
by John Doucette
- Tips for Making Effective Collection Calls
-
written on March 04, 2011
by John Doucette
- Best Practices for Collections
-
written on September 24, 2010
by John Doucette
- Collections Means Customer Service
-
written on September 08, 2009
by William Kesman
- Make a Wise Investment Partnering with a Collections Agency
-
written on August 04, 2009
by William Kesman
- Developing a Steadfast Collection Policy
-
written on July 20, 2009
by William Kesman
- Getting Back To Basics
-
written on June 15, 2009
by William Kesman
- Is Credit and Collections Making History
-
written on June 03, 2009
by William Kesman
- Making the Collection
-
written on May 11, 2009
by William Kesman
View All
More By This Expert
-
Invoicing Practices and Collection Effectiveness
-
written on December 01, 2011 by John Doucette
-
Benchmarking Collection Performance
-
written on September 27, 2011 by John Doucette
-
Prioritizing Collection Activity - You Can't Call Them All
-
written on June 06, 2011 by John Doucette
-
The Cost of Extending Credit
-
written on April 21, 2011 by John Doucette
-
Collection Call Tips
-
written on March 04, 2011 by John Doucette
-
Ohio Business Lending Clearinghouse
-
written on October 18, 2010 by John Doucette
-
Best Practices for Collections
-
written on September 24, 2010 by John Doucette
-
SBA Microloans Loans from Lenders You Never Heard Of
-
written on August 31, 2010 by John Doucette
-
The CIT Bankruptcy and its Impact on Small Businesses
-
written on November 05, 2009 by John Doucette
-
Banks Increase Small Business Lending
-
written on August 24, 2009 by John Doucette
-
Easy Ways to Improve Cash Flow
-
written on January 02, 2009 by John Doucette
-
Turn Invoices into Cash
-
written on August 25, 2008 by John Doucette
-
What to Do When the Bank Says NO -- An Overview of Alternative Sources of Capital
-
written on June 23, 2008 by John Doucette
View All
The first step of the accounts receivable management process is invoicing. It’s hard to collect an invoice that the customer does not have or which is inaccurate or incomplete so here are a few simple suggestions to make your billing process more effective.
-
Send the invoice in a timely manner.
If your customer doesn’t have the invoice it can’t get paid. Further, invoices that come months after the fact can cause confusion if the customer can’t remember the transaction.
-
Be sure the invoice is clear and complete.
The invoice should state what the billing is for – what products or services were delivered and when. Provide as much detail as practical so the customer knows they are paying for. This should go without saying but make sure the invoice is readable and professional looking – not handwritten or badly formatted. Standard accounting software like QuickBooks can help you generate good looking and effective invoices.
- Make sure you have the correct billing address. Large organizations can be complicated and sending an invoice to the wrong address could lead to it being lost or delayed. Be sure to ask the customer’s representative where to mail the invoice if it’s not clear from a purchase order or other such document.
-
Understand the internal approval process for your large customers. Do you send the invoice directly to Accounts Payable or should it first go to the person who made the purchase for approval before it is forwarded to AP for processing?
-
Include clear payment terms and due date on the invoice.
Calculating the due date for the customer will help them focus on that date.
-
Include a Remit To address.
If appropriate, also include instructions to “make check payable to” the entity name you prefer.
-
Include any information required by the customer to process the payment request.
This could be a PO or Job number or supporting documentation such as a signed receiving document (proof of delivery) or approved timesheets. This will be different for every customer so be sure to ask about their requirements before starting work.
-
Include a statement to the effect that “A Late Fee of x% may be assessed on past due balances” if you ever want to enforce such fees.
Whether this is a good practice or not is debatable and I will address that in a future posting. The exact language can vary and you might want to have your legal advisor review or provide the exact wording to use. The fee percentage (interest rate) is regulated in some states so be sure you know what the limits are. Practically speaking this is typically in the 1% - 1.5% per month range. More than that could seem excessive; less than that isn’t worth the trouble.
One final thought: in collections if you don’t ask for the money you don’t get the money. Professional and timely invoicing is the first step of the process of getting paid for the work you do.
John Doucette
Anytime Collect Product Specialist
e2b software
(440) 352-4700 x249
jdoucette@e2bsoft.com
www.anytimecollect.com