Get paid in full and on time by improving your contractor invoicing
Include your business name and contact details so the client can reach you
Make sure the invoice gets into the hands of the right person
Track the invoices you send so nothing falls between the cracks
Itemize your services so clients understand what they’re paying for
Include payment terms
Encourage timely payment with early payment discounts and late payment penalties
Sync contractor invoicing with your quoting, time tracking, and accounting software
Send invoices right away and follow up on late payments
The way you approach contractor invoicing plays a significant role in how quickly your invoices get paid and whether they get paid at all. Many contractors overlook the importance of invoicing. They assume if they work hard, their clients will pay their bills on time and in full, but unfortunately, that’s not always the case.
Invoicing is a critical part of accounting, and it has a direct impact on your cash flow and working capital. Do you deal with contractor invoicing effectively? Are you optimizing the invoicing process in a way that supports your business? Check out these nine tips.
1. Don’t forget the basics
While this tip may seem obvious, some contractors overlook its importance, especially early in their careers or when they’re handling small jobs. Don’t forget the basics: Make sure that every invoice you generate includes your business name and contact information. After all, you want to ensure clients know who to pay and how to reach you.
To make the invoice look as professional as possible, include your logo. Electronic contractor invoicing systems make this easy. Also, add details about the client as well as the invoice tracking number, your services, and payment terms as detailed below.
2. Get the invoice to the right person
If you want your invoice to get paid, it needs to go to the right person. Not only does it need to go to the right business, but it also needs to go to the person who cuts the checks. Make sure you have correct, up-to-date contact information for all the clients you invoice.
3. Use a tracking system
Set up a tracking system so you know which invoices have been paid. When you first get started, simply numbering your contractor invoices can do the trick. Just note a number on each invoice, pop the number with the invoice details in a spreadsheet, and then, update the record when you get paid.
Alternatively, there are countless contractor invoicing software applications that can simplify this process for you. These systems track the invoices you send, and they provide oversight on details such as how long clients take to pay.
4. Itemize your services
When drafting invoices for your contracting business, make sure that you itemize your services. The traditional format consists of several columns. In these columns, you list the service performed, followed by the number of hours worked, your hourly rate, and the subtotal for each service. Then, at the bottom of the invoice, you total all the services you have provided.
5. Include payment terms
The role of contractor invoicing is to explain to clients how you want to be paid. As outlined above, you include the amount due and the services performed, but you also need to let clients know when you expect to be paid.
Clearly state payment due dates and payment terms on every invoice. Note if you charge late fees or offer discounts for early payments. Both of these methods encourage your clients to send in their bills on time.
6. Use a consistent format with contractor invoicing
Your clients are busy, and they shouldn’t have to figure out how to decipher a new invoice every time they receive a bill from you. Use consistent formatting to avoid this issue. Ideally, all of your invoices should have the same details in the same spots.
7. Sync contractor invoicing with other software
To simplify this process as much as possible, try to sync your contractor invoicing systems with other software applications. Your quoting system should sync with your invoicing system to help with consistent billing. Clients typically feel more comfortable when they receive invoices that reflect the quotes they accepted.
If you use apps that track hours or mileage, you may want that info instantly ported over to your contractor invoicing system. This setup ensures that you don’t forget to charge for any of your time. Finally, your invoices should sync with your accounting system.
8. Send invoices immediately
Clients have short memories, and if you send your invoices too long after providing a service, they may be less likely to pay their bill. Get the invoice in front of the client when your work is still fresh in their mind.
Timely invoicing also shows the client that you’re serious about getting paid. If you wait weeks or months to request payment, your clients may match your speed. They may assume this is a bill that they can put on the back burner while they take care of other obligations.
9. Follow up on late payments
Make sure that you reach out to clients promptly if they haven’t paid their invoices. Follow up with a second invoice or a phone call. Sometimes, a quick reminder is all that a client needs to make a payment. In contrast, if you don’t follow up at all, they may never pay.
To track the results of your efforts, look at your contractor invoicing before and after implementing these tips. In most cases, these tips should help your invoices get paid more often and more promptly. You should also have a better sense of which invoices are outstanding so you can follow up on them more easily.
Contact Franco Blueprint for help
At Franco Blueprint, we offer accounting, invoicing, CFO services, and more. We can help whether you need assistance implementing software for contractor invoicing or you want someone to handle the whole process. To learn more about how our services can support the growth and success of your business, contact us today.