Why It’s High Time You Stopped Invoicing Your Clients

Businesses have been sending their clients invoices since time immemorial. It’s almost an age-old practice, like putting advertising up on billboards and making random widgets in factories. 

But just because a practice goes back a long way, it doesn’t mean it’s a good idea. Sending clients bits of paper listing how much money they owe you is a recipe to put them in a bad mood, particularly if you haven’t been earning your keep. 

Think about how it feels when you receive an “invoice” from the government telling you how much tax you have to pay them. It’s not a good feeling. All that time and effort spent working, only for it to go into other people’s pockets. 

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That’s how your clients feel when they get an invoice from you. Yes, there’s some value there, but the bill just reminds them how much they are paying for your services. It’s an incentive for them to look for cheaper offers.

In this post, we take a look at some of the reasons it’s high time you stopped invoicing your clients. Here’s why:

It’s Easier Than Ever To Get People To Pay Upfront

Paying upfront for services is becoming the norm in many industries. Due to the emergence of a vendor agnostic means of payment processing solutions, it’s now easier than ever to allow people to pay upfront. Customers don’t even have to carry a lot of cash because they can pay via other means and then get what they want from you. This is often considered much better than doing it the other way around (which is always a risk). 

As you can imagine, in the past, getting facilities to take instant payment online and in-store was challenging. But today, there are so many ways to do it that we’re spoiled for choice. The merchant account available here, for instance, caters to card payments. 

It Lets You Sell Faster Services

Today’s customers and clients are also looking for services now instead of having to wait. They don’t want standard turnarounds and lead times. They want you to deliver value immediately. 

You can do this via invoicing, but why not take advantage of instant cash flow? Why not use clients’ urgency as a tool for getting what you want – fast money in your account?

It Avoids Chasing Money

Why do some businesses constantly run massive balances on their accounts receivable? It’s because they are still using old-fashioned (and outdated) invoicing practices. They deliver a service, pay for it out of their own pockets, and then send the client an invoice that they have to pay in 30 days. 

As anyone experienced in invoicing will know, 30 days can soon turn into 60 or 90 before you finally receive the money. And chasing up all those late payments is expensive. You have to hire an account manager or divert resources from your admin team. It’s not easy. 

Applying penalties isn’t popular, either. Clients get annoyed that you are charging them more and may go to your competitors. 

Getting customers to pay upfront deals with all these issues. If they’re worried, just offer them a money-back guarantee. Hardly any of them will take you up on it. 

Avoiding Getting Paid Late If Work Runs Over

Invoicing often requires you to finish the work first and then bill your client for you. But, of course, this system is risky. If work runs over, it will take longer for you to get paid which, in turn, will affect your cash flow. 

There are all sorts of reasons why projects overrun. They might be more difficult than you expect, the client might make changes, or you might not have the right people on your team.

What’s more, the bill often winds up being higher than the customer expects. Extra time and effort cost money but reflecting that in the final price can leave customers feeling frustrated. 

Again avoiding invoices eliminates these problems. Taking card payments or even setting up automatic subscriptions keeps payments predictable and customers happy. 

Make Your Payments Clearer

Invoice charges are always a bit of a mystery to clients. Plus, only finding out how much services cost after the fact isn’t very appealing. Most customers want to plan their expenses in advance. 

When you avoid invoicing, it forces you to define your payment policies more clearly. Avoid the temptation to write a multi-page document setting out exactly how much you charge for everything. Instead, provide a simple sheet of rate that clients can use to figure out what your goods or services are going to cost them. 

Always stand by your rates. Some customers will attempt to negotiate with you, but if you know the value you offer, then you should stick with it. If you reduce your fees, it could lower your value and send a signal to partners that you offer big discounts.