Invoicing software is super underrated
Hey, I’m Michael Eckstein 👋, and this is ‘Ordinary & Necessary’, a weekly newsletter about the boring business topics that don’t get enough traction on the web, but will help you manage and grow your business. You signed up on my website. If you’d like to unsubscribe, just click the link at the bottom of this email. No harm, no foul, I’d love to have you back sometime.
Across the board, software is an amazing time saver. You can automate just about every boring, administrative task you have. Need to schedule meetings with clients? Use Calendly or Acuity Scheduling. Need to keep notes on client conversations? Use a CRM or practice management software. Need to invoice clients? Use Xero, Quickbooks Online, or one of a million other invoicing solutions.
Every single invoice I receive could be improved with software. The worst offender is my local nonprofit’s security tech vendor. They charge us a flat management fee every month and, regularly, forget to bill us for months on end! They just sent me an invoice for 5 months’ worth of management fees a few days ago. Invoicing software can fix that. It can automate all their monthly recurring invoices.
Invoicing software features you should be using (These are basic features available in both Xero and Quickbooks Online. You don’t need anything fancy.):
Recurring invoices: Manually sending recurring invoices each month hurts your cash flow (eg, sending your invoice on the 5th instead of the 1st) or, worse like our security vendor, you could forget to send them all together. Now, I’ll send our vendor their 5 months of management fees (after complaining to you about it), but what if your client isn’t as honest? You don’t want to be in a situation where you need to collect on half a year’s worth of payments. As the saying goes, “If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem,” except, in this situation, you’re the bank.
Automatic withdrawals: Every mid to high ticket service business should leverage automatic withdrawals. Instead of waiting for clients to pay (the check is in the mail!), you can withdraw your funds yourself. Of course, you can’t randomly withdraw funds, so include automatic withdrawals in your contract negotiations. While they’re signing paperwork, they can also approve a bank authorization. If they don’t want you to automatically withdraw funds or charge their card, you can always concede it during your contract negotiation (effectively, giving them a win without lowering your price 😉). But, they’ll probably accept it. Half their bills are probably on autopay as is. (Here’s Quickbooks Online’s bank authorization form.)
Automatic reminders: If you aren’t using automatic withdrawals, then you’ll want to take advantage of automatic reminders. You can set your invoicing software to continually follow up on your invoices until they’re paid. Automatic reminders also save you from sending that awkward ‘where’s my money’ email.
Import billable hours from time tracking software: The small business world is shifting from hourly billing to flat fees. But, the reality is that many businesses still bill by the hour. When researching time tracking software, find one that integrates with your invoicing software (including accounting software that invoices). Then, when you’re ready to invoice your client, you can push your hours from your time tracking software into your invoice. (Extra tip: Look for a time tracking software that also integrates with your payroll software so you can quickly pay hourly employees!)
Billable expenses: This one is specific to accounting software that can invoice (ie, all of them). When you’re categorizing an expense, you can tag it as billable to a specific client. Then, when you prepare their invoice, you can quickly add that expense to their invoice. Not only does that save time manually entering their expenses, but it saves you from keeping track of billable expenses and remembering to include them on the invoice.
THIS WEEK’S ACTION ITEM: If you have monthly recurring clients, set up recurring invoices. (Please, for my sanity. 😥)
Have a good weekend and stay safe!