Getting paid on time for the work your team performs is never as easy as it sounds. That statement is particularly true for MSPs that deliver a variety of services over the course of each month to a wide range of small business customers. Just keeping track of the recurring billing can be tricky. When providers perform additional work and increase or decrease the number of end-users on a weekly basis, it is all too easy to lose track of every detail.
Focusing more effort on invoicing best practices will help. MSPs can strengthen their revenue and margins and eliminate costly payment delays by putting their billing processes in order and, whenever possible, adding automation to the mix.
Invoicing best practices eliminate the major headaches for IT services firms. An organized billing process will speed collections, improve cash flow, and reduce errors and issues that keep employees on the phone when they should be focusing their time on support, sales, and other more critical and profitable business activities.
The ROI of invoicing best practices
MSPs rarely get paid without billing their clients. Most business professionals typically think of invoices as the first and most essential step in the collections process.
Invoicing best practices provide MSPs with virtually instantaneous results, especially when they add automation to the mix. Improving the speed and consistency of payments not only boosts cash flow and gives providers the ability to use more of their own money, but a clearly defined and managed collections process helps enhance client relationships. Setting and following through on customer expectations helps earn their respect (and their business).
The best part of invoicing best practices? None of these improvements are incredibly complicated or expensive to apply. Here are 10 of the most cost-effective invoicing best practices any MSP can easily implement.
1. Create (and stick to) a schedule
You cannot expect your clients to pay their bills quickly when they consistently receive invoices late. Like you, most small business owners are too busy to open bills and make out checks every day, and missing their normal disbursement cycle may significantly delay your money. Invoicing best practices demand consistency. MSPs should submit recurring services bills on the same day each month (i.e., first, last, other), and deliver invoices for projects or other work requiring immediate payment within a standard time frame, perhaps 1-3 days.
Periodically check invoices and confirm details listed on the document (paper or electronic). Note delivery/service dates, as well as payment terms and conditions. One of the most valuable invoicing best practices is to pick employees outside the billing department to occasionally review these documents, which helps ensure the language is clear and concise enough for anyone to understand.
3. Break from the norm
Most MSPs are quite creative. Incorporate some ingenuity in your billing process with ideas such as client incentive programs that reward quick payments or incorporate trivia or fun IT facts so clients will eagerly await their next invoice. Incentivize employees to provide suggestions on new ways to engage clients and speed up payments. You never know what invoicing best practices your team members may dream up.
4. Provide company information and a description of all services and goods
This seems like the “no brainer” of invoicing best practices, yet many businesses fail to include essential details such as company name, mailing address, and payment terms on their invoices. Clients also like to know, if not need to know, the specific goods and services included in the bill. With all the invoicing tools available to MSPs today, it is easier than ever to offer transparency and build trust.
5. Emphasize the options
Make it easy for your clients to pay their bills quickly. List payment options prominently on each invoice using clear and concise language to prevent errors and misunderstandings. This is the perfect place for MSPs to include information for utilizing an online payment portal to simplify (and speed up) the collections process.
6. Request email “received and read” confirmations
Email is the quickest and most reliable way of distributing invoices. Most of these business-essential communication platforms allow senders to confirm when others receive and read their messages, which indirectly increases its urgency level in the mind of recipients. That last point is one of the easiest, most cost-effective, and subtle invoicing best practices providers can adopt to remind clients to pay their bills.
7. Add friendly due date reminders
MSPs know how busy things get for business owners. Your billing statement is likely just one of many your clients receive each month, and it is all too easy to misplace or overlook incoming messages − neither email nor the USPS is foolproof. Things do get lost. A common invoicing best practice is to send a friendly reminder as due dates approach to minimize the real and make-believe excuses. That proactive approach can save your clients some embarrassment and help them avoid potential late fees.
8. Send confirmation/appreciation notes
Never consider the billing process complete until your company recognizes a client payment. A follow-up note is an opportunity to show that you truly value their business, always appreciate their feedback, and, if deserving, would love their recommendations to other organizations in need of IT expertise. That final point is one of the invoicing best practices that can have a significant positive impact on your revenue. Remember, sincerity matters, and satisfied clients are one of your most valuable sales and marketing resources.
9. Utilize branding
Invoices are a billboard for MSPs. Be sure your branding is prominent with at least a company logo and light messaging (without going overboard) to highlight new services or encourage upsales. This invoicing best practice is relatively easy to implement with today’s accounting tools, including QuickBooks, FreshBooks, Xero, and various MSP-specific applications.
10. Automate the process
Generating invoices is the easy part. Getting your clients to pay each bill in a timely fashion is considerably harder today, and collections policies only go so far during a pandemic. SMBs need clear direction, including a firm time window, paying their managed services bills, and automation to ensure the successful completion of those tasks each month. Platforms like ConnectBooster give your customers the ability to manage their credit card and ACH information and access current and past invoices in a secure online portal. Integrations with PSA and accounting tools ensure everything updates across all your systems in real-time, saving you a lot of time and headaches while strengthening your MSP business’ cash flow. These solutions and connections also simplify some of the other invoicing best practices covered in this post.
Monitor your results
As with any project in an MSP business, you should always measure the results after implementing invoicing best practices. Did cash flow improve? Are clients receptive to the changes?
Be sure to give it time. As you make changes, gather feedback from your clients and monitor for any major issues. Patience is vital. While your clients may not appreciate the changes right away or accept the reasoning, many will go along if it does not negatively affect their business.
Invoicing best practices are relationship-building opportunities. Simplifying and strengthening the collections process can be a win-win if it positively affects both businesses.