As a business begins to grow, one of the most important areas to focus on is monthly billing. It’s imperative to streamline this process so that finances can run smoothly. In this beginners guide, we’ll explore some tips from successful young entrepreneurs on how to efficiently and effectively manage monthly billing.
Delegate the Process to a Financial Professional
One of the best things an entrepreneur can do as their business grows is to delegate the day-to-day finances to someone else. This can be done by hiring a CPA, a fractional CFO, or a trusted bookkeeper. By removing the responsibility from the founder’s plate altogether, an hour-long check-in meeting once a month becomes much more manageable than dealing with individual invoices.
Set a Company-Wide Day for Invoicing
It’s also essential to have a company policy for how billing and payments are handled. It’s even better to create a policy for when invoicing takes place. Set a day in your company for when this will occur, and make sure everyone is aware. The better you systematize it, the better it will go.
Find a Software Solution That Works for Your Business
There are tools available, such as Quickbooks Online, Stripe, and Chargify, that handle monthly billing. These solutions enable businesses to set up monthly billing options and monitor activity. They also integrate with a variety of other third-party tools, enterprise resource planning systems, and e-commerce systems.
Build a Tech-Centered Process for Invoicing
Entrepreneurs now have access to a long list of software, particularly in the cloud, that supports small- to medium-sized businesses. These tools can help with invoicing, collections, and even processing payments. Invest time in building a process that leverages the best software for the business while documenting all the relevant steps so anyone on the team, including new members, can step in to take over the work.
Negotiate the Proper Payment Terms Up Front
As a business reputation and the desire for others to do business with you grows, you should start dictating better payment terms from your vendors. For product companies, a net 90 payment term can be brutal for finances. Pressure your sales team to negotiate better terms upfront on all future deals.
Leave Enough Buffer Time Between Invoice Deadlines and Payroll
Murphy’s Law applies to monthly billing and invoicing. For this reason, have a deadline for invoices set early enough that the accounting team can take extra time to ensure any problems are resolved without costing anyone their paycheck. This puts in place a buffer zone to prevent problems from becoming more significant issues.
Use Standardized Templates and Routines
Have a schedule in place with cutoffs for processing tasks, and keep templates standardized so that data flows seamlessly through your database. Establish daily routines to generate billing and run scripts with the output of any errors. The work then becomes reviewing the daily run, which ultimately gives more time for other essential tasks.
Leverage Technology to Automate Invoicing and Payments
All clients should be pushing funds to businesses, or businesses should be pulling funds from clients each month. Automated clearing house payments with set invoicing and collection dates are crucial to cash flow. Using a web-based platform, such as QuickBooks Online, allows businesses to streamline many of these processes related to initial billing, recurring billing, and reminders of outstanding payments.
In conclusion, as your business grows, it’s essential to focus on streamlining monthly billing. By delegating to a professional, setting company-wide policies, utilizing software solutions, building tech-centered processes, negotiating better payment terms, leaving enough buffer time, using standardized templates, and leveraging technology to automate, entrepreneurs can successfully manage monthly billing and stay on top of their finances.
