You have a terrific product or service. You spend countless hours perfecting it and marketing it. Today you had your first sale and as you hang up the phone, you do a little jig around the room. Then you call your family and friends.
The next step is to provide the product or service. But before you do, the office work begins. You may be terrific at providing your service or building your product, but you may not be so terrific at figuring out how to produce a professional invoice or estimate.
Though you may think office work is not as important as delivering the service or product, or is done after the service or product is delivered, or done when you “get around to it,” those thoughts will not last for long.
Invoices for products or services that are not Previously billed, or at the time of delivery, will have a lapse in payment. Or, possibly no payment at all, as you may forget to invoice the customer after the job is complete. You are probably thinking, how is that even possible!? Well, it is possible and happens more times than you might think.
When you begin to bring in more clients, you become busier. You go from service to service, delivering product after product. Then ten products go by, or two months pass after a service has been delivered and you randomly think, I must invoice that customer!
In the meantime, more orders are coming in, more people are calling for estimates, and more papers begin to pile up in your designated box of customers to bill, bills to pay, and material receipts. You look at the box and think, “I will bill that customer or pay that bill tomorrow.” The problem is tomorrow never seems to come. Next thing you know, you have two overflowing boxes of papers and a call from one of your suppliers that you have not paid your bill for 45 days. Not a good way to begin your business!
You think, really?, that will never happen to me. I will pay that bill as soon as it arrives in my mailbox. Sounds like a plan however, you may not have the money to pay that bill when it arrives in your mailbox because you are waiting on payment from your last customer, oh wait, you did invoice that customer, right?
Unfortunately, without organizational record keeping, you will never know unless you swallow hard and call that customer. Now you are relying on your customer’s honesty in saying they did or did not pay you. See how it goes?
Related: It’s Time! Make Filing Your Paperwork A Priority Now.
Non-organization on the front end for invoicing is like a little snowball that becomes an avalanche quicker than you think.
Another thought you may have is to collect payment before you leave the customer. However, when the time comes to put pen to paper, you are pressured to remember everything you did, how many hours you spent, and what products and materials you used. You feel uncomfortable while the customer stares at you while you try to figure it all out and write down the figure they have to pay. This situation may put you in the position where you invoice the customer less than you would have if you had given them a written estimate or invoice before the work began, or before the product was delivered.
Though product driven businesses should have a price list for products which alleviates problems of what to charge, if you are in the business where your product pricing or service is subject to change, then invoicing on the front end may sabotage you on the back end when it is time to collect payment.
This is the importance of giving a customer an estimate up front for variable products and services. While completing the project, you may have used more materials than originally thought or spent more time on the project than anticipated. Materials and additional time should always be discussed with the customer before you go ahead and make the assumption the customer is OK with any extra expenses. They may not be.
Only after you have the customer’s consent, add the extra materials and extra time onto the estimate. Give the customer a copy. Don’t surprise the customer at the end of the project or service with a much higher than originally estimated cost. This will almost ensure the client will feel taken advantage of and possibly scammed.
You will also be guaranteed not to receive a call back for repeat business, not get recommended to their friends, or worse, be given bad reviews on your social media pages for other people to read.
Before your first service, or before you deliver your first product, you need to have a plan as to how you are going to go about billing your customers. There are several different accounting programs available to businesses that will invoice, estimate, download bank statements, collect payments, and give reports.
I would recommend researching accounting software programs to determine which program will work best for your business. Don’t let this research bog you down though, look at several programs, talk to other business owners and make the decision, preferably, before you have to use it for the first time. There is a real reason you need to get comfortable with the accounting program before business begins.
Related: 6 Reasons Your Office Is In Chaos
You won’t have time to figure it out on the fly. If you are in a rush or the customer is standing next to you and you have no clue how to produce an invoice or estimate, you will not be able to print or email it to them. This will set you up for failure as you won’t use the program and your designated box will continue to overflow with handwritten papers that need to be put into the accounting program.
As a business owner, you need to know your strengths. If you are a person who prefers to be in the field, mingling with clients and doing the work first hand, then office work may not be your cup of tea. You may actually resent the office part of your business and feel your blood pressure rising just thinking about it. However, if you are a person who likes to have all the i’s dotted and t’s crossed, you may enjoy tackling those papers.
Thinking about the process of invoicing and estimating may feel like a drag, but having these processes in place at the beginning will reduce your stress in the long run. If you are not the type of person who is good at keeping records even after you have tried, I recommend finding someone who can. You may not need them to help you every day or even every week, but they will keep your business organized and running smoothly while you produce your products, deliver services, and work on building your business.
What has your experience been? Are you great at producing invoices and estimates before work begins or at the time your product is delivered? Or are you a person who gets to office work when they can? Have you found advantages or disadvantages to your choice?
Hi, I’m Karen. Welcome to my website! I will show you how to establish the framework for an organized and successful leadership and office management system.
